Service Firms, Private-Sector Jobs Spike

Strong consumer demand pushed a key measure of the economy's service sector last month to its highest level in more than four years.

The Institute for Supply Management, a trade group of purchasing executives, said Wednesday that its index of service sector activity rose to 57.1 in December, up from 55 the previous month. Any reading above 50 indicates growth. The increase marks the 12th straight month of expansion for the sector, which employs 80 percent of the work force. It includes industries from health care to retail to financial services.

The index is at its highest point since May 2006. The index plummeted to 37.2 in November 2008, at the height of the financial crisis. The sector contracted for all but two months in 2009, then began expanding last year.

The report is the latest evidence that the economy is gaining strength. Earlier Wednesday, payroll services provider ADP said the economy added 297,000 private-sector jobs last month, the biggest increase since the company began tracking employment 10 years ago.

The ISM said its new orders index jumped to 63, its highest level since August 2005. That's a sign that growth should continue in the coming months.

The service sector reading follows a similarly strong reading on U.S. factories. On Monday ISM reported that manufacturing activity grew at its fastest pace in seven months.