Growth in U.S. service sector activity unexpectedly accelerated in the month of September, according to a report released by the Institute for Supply Management on Wednesday.
The ISM said its non-manufacturing index climbed to 61.6 in September from 58.5 in August, with a reading above 50 indicating growth in the service sector. Economists had expected the index to dip to 58.0.
With the unexpected increase, the ISM said the non-manufacturing index reached its highest level since the inception of the composite index in 2008.
"The non-manufacturing sector has had two consecutive months of strong growth since the 'cooling off' in July," said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee.
"Overall, respondents remain positive about business conditions and the current and future economy," he added. "Concerns remain about capacity, logistics and the uncertainty with global trade."
The unexpected increase by the headline index was partly due to a jump by the business activity index, which surged up to 65.2 in September from 60.7 in August.
The employment index also spiked to 62.4 in September from 56.7 in August, indicating a significant acceleration in the pace of job growth in the service sector.
Payroll processor ADP released a report earlier in the day showing employment in the service-providing sector shot up by 184,000 jobs in September.
While the report also said the new orders increased to 61.6 in September from 60.4 in August, the supplier deliveries index rose to 57.0 from 56.0, suggesting deliveries are slowing at a faster rate.
On the inflation front, the prices index climbed to 64.2 in September from 62.8 in August, pointing to the 31st consecutive month of price growth.
The ISM released a separate report on Monday showing a slightly bigger than expected slowdown in the pace of growth in the manufacturing sector in September, partly reflecting supply chain issues.
The purchasing managers index fell to 59.8 in September from 61.3 in August, while economists had expected the index to edge down to 60.3.
The slightly bigger than expected decrease by the index came after it reached its highest level in over fourteen years in the previous month.
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