WASHINGTON — U.S. service companies grew at a faster pace in December, helping the economy end 2011 on a stronger note.
The Institute for Supply Management says its index of non-manufacturing activity rose to 52.6 in December, up from 52 in November. Any reading above 50 indicates expansion.
The companies, which employ roughly 90 percent of the work force, reported seeing an increase in new orders. That suggests January could be even stronger for service companies.
The trade group of purchasing managers surveys a range of businesses, including restaurants, hotels, retailers, financial service firms and construction companies.
One concern is that many companies say they are in a holding pattern on hiring. An employment index in the survey stayed below 50 for the third time in four months, a sign that companies are not adding many workers and in some cases are cutting them.
Still, the hiring index conflicts with other data showing stronger job growth in the final months of last year.
On Friday, the government reports on December job growth and unemployment. Economists forecast that employers added 150,000 net jobs. And they expect the unemployment rate ticked up to 8.7 percent.
The service sector has grown for two straight years. But activity had slowed for a third straight month in November, dropping to the lowest reading since January 2010.
Many retailers benefited last month from solid holiday sales. They also reported that a flurry of post-Christmas bargain shopping helped drive sales higher in the last week of December.
Sales at stores open at least one year rose 5.3 percent during the week ending Saturday, compared with the same period a year ago. The report came from the International Council of Shopping Centers and Goldman Sachs Weekly Chain Store Sales Index, which estimates sales for 24 major stores like Target Corp. and Costco Wholesale Corp.
Other data suggest the economy ended 2011 with some momentum.
U.S. factories grew in December at the fastest rate since June, according to ISM's manufacturing index. Consumer confidence rose to the highest level since April, according to the Conference Board.
The outlook for hiring has improved. Applications for unemployment benefits are down. Employers have added an average of 143,000 net jobs a month from September through November — double the pace for the previous three months. And the unemployment rate fell in November to 8.6 percent — the lowest level in three and a half years.
The economy likely grew at an annual rate of 3 percent or more in the final three months of this year, analysts say. That would top the 1.8 percent growth rate in the July-September quarter, and the 0.9 percent growth rate in the first half of the year.