The nation's non-manufacturing companies expanded in September, the Institute for Supply Management reports.
According to the purchasing-managers group, services activity rose last month, spurred by a sharp rise in new orders. The ISM's non-manufacturing index rose from 51.8 in August to 53.2 in September. Economists polled by MarketWatch had been expecting the index to move to 52.3.
Not only did new orders at American service companies tick up - employment rose, too. The ISM's service-sector employment index rose 2 percentage points to 50.2, indicating that hiring is picking up, compared to September 2009.
While the service industry appears to be rebounding, executives polled by ISM are only cautiously optimistic. "Respondents' comments continue to be mixed about business conditions, with a slight majority reflecting optimism," ISM Non-Manufacturing Business Survey Committee chair Anthony Nieves said .
And it remains unclear if the employment growth that took place in the service sector last month will make a dent in the nation's unemployment rate. Services firms represent 90 percent of the nation's economy, so a rise in services hiring is good news for the broader economic picture - but with so many jobs lost since the start of the recession, it will take years of sustained growth for the jobless rate to fall significantly.
By Benjamin Foster