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Service sector grows at fastest pace in six months

U.S. service companies, which employ nearly 90 percent of the work force, grew in September at the fastest pace since March, driven by more activity and an increase in new orders.

The Institute for Supply Management says its index of non-manufacturing activity rose to 55.1, up from 53.7 in August. Any reading above 50 indicates expansion.

The service sector has grown for 33 straight months, based on the ISM survey. The report measures growth in a broad range of businesses from retail and construction companies to health care and financial services firms.

"It indicates a little bit of growth. This is good information ahead of the monthly employment report," said William Larkin, portfolio manager at Cagot Money Management. "It looks more like things are heading in the right direction. It is this new reality -- we don't have robust growth, we just have very moderate growth."

Stephen Stanley, chief economist for Pierpont Securities, agreed. "It's in line with the factory report on Monday. We have seen a few reports now that seem to show things might have picked up in September, although it's not a strong improvement," Stanley said. "Perhaps people are feeling better even though businesses are not. We have not broken out of the 1 to 2 percent growth range for this year."

The Associated Press and Reuters contributed to this report.

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