WASHINGTON — Employers holding out for more evidence that the economic recovery is finally taking hold got some Monday: The nation’s service sector is growing quickly, and contracts for home sales are up.
The big question is whether the latest signs will help embolden companies to hire at a faster pace and bring down the unemployment rate.
Some economists and corporate executives say it could. And they say they no longer fear a double-dip recession — in which the end of government stimulus money would tip the economy back into contraction.
Factories are producing more. Americans are willing to spend more. And the economy added 162,000 jobs last month, the most in nearly three years.
“It’s much better news than we would have thought a few months ago,” said Jennifer Lee, an economist at BMO Capital Markets.
The trade group Institute for Supply Management said its service index rose to 55.4 in March from 53 in February. Any reading above 50 signals expansion. It was the strongest growth since ISM revised how it measured the service sector in January 2008.
The service sector is critically important because it accounts for about 80 percent of U.S. jobs, excluding farm workers. It includes jobs in such areas as health care, retail and financial services.
While the reports on the service sector and home-sales contracts helped spark optimism on Wall Street, some analysts are less optimistic. They worry the economy will slow sharply over the next few months as government stimulus ends and other factors fade, such as a rebound in company inventories.
Gad Levanon, senior economist at the Conference Board, a business research group, noted that the economy has grown at about a 4 percent pace in the past nine months. Normally, that would translate into more hiring.
