The pace of growth in the dominant U.S. services sector quickened a bit in December, an industry report showed on Thursday, suggesting continued improvement in the economy.
The Institute for Supply Management said its services sector index rose to 52.6 last month from 52.0 in November. The reading fell shy of economists' forecasts for 53.0, according to the Reuters Poll, but was above the 50 mark that indicates expansion.
The report bolsters the case for "modest recovery in the U.S. economy," said Omer Esiner, chief analyst at Commonwealth Foreign Exchange in Washington.
Hiring in the services sector, which accounts for more than two-thirds of U.S. economic activity, improved in December, which Esiner called "encouraging."
But at 49.4, he noted that the employment component was still below the 50 line between expansion and contraction.
A separate report on Thursday showed companies hired 325,000 new workers in December, the highest monthly gain in a year. A more comprehensive government report due Friday is expected to show that a more modest 150,000 public and private sector jobs were added last month.
"Certainly we're getting some more encouraging news on the jobs market, but we have to be very aware that it does reflect a very volatile period of the year -- the holiday season and the days following the new year," said Bernard Baumohl, chief global economist at Economic Outlook Group in Princeton, New Jersey.
The U.S. services sector did appear to be holding up a bit better than the euro zone's. An upturn in German activity helped pull the Markit Eurozone Composite PMI up to 48.3 last month from 47.0, though the survey showed weaker economies such as Spain and Italy continued to fall behind Germany and France.
Markets expect the euro zone to fall into recession this year as countries struggle to reduce high budget deficits.
Economists expect fourth-quarter U.S. growth to have outpaced the 1.8 percent rate recorded between July and September, yet most expect the economy to expand at a gradual pace of about 2 percent in 2012.
