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Economy

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Service-sector gain is best in 6 months

– Service industries expanded in September by the most in six months, underpinning an economy that lost momentum in the first half of the year.

The Institute for Supply Management’s non-manufacturing index climbed to 55.1, exceeding the most optimistic projection in a Bloomberg survey, from 53.7 in August, figures from the Tempe, Ariz.-based group showed Wednesday. Readings above 50 signal expansion.

In a separate report, ADP Employer Services said private payrolls increased 162,000 last month.

“The economy seems to be leveling off,” said Paul Edelstein, director of financial economics at IHS Global Insight in Lexington, Mass. “Domestic factors are starting to improve. Jobs are being created and people are feeling a little more confident so they are going to spend more.”

A sustained pickup in industries from construction to retailing that account for almost 90 percent of the economy will help make up for recent weakness in manufacturing. At the same time, a cooling global economy has prompted some service providers such as FedEx Corp. to trim growth forecasts.

The U.S. figures stand in contrast to other data Wednesday showing services industries from Asia to Europe slowed after the euro-area debt crisis pulled economies including Spain and Italy into recession.

Economists projected 53.4 for the September services gauge, according to the median of 77 estimates in a Bloomberg survey. Forecasts ranged from 51.5 to 54.7. Since the recession ended in June 2009, the gauge averaged 53.4 through August.

Roseland, N.J.-based ADP said the September increase in payrolls followed a revised 189,000 rise the previous month that was smaller than initially estimated. The median estimate by Bloomberg projected a 140,000 advance.

A separate report showed mortgage applications last week climbed to the highest level in more than three years as borrowing costs slid.

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