Service expands in April

  NEW YORK _ The nation's service economy unexpectedly
expanded in April after contracting for the previous three months.
    The Institute for Supply Management's index of the service
sector released Monday showed a better-than-expected easing of 52
for April, up from 49.6 in March. Wall Street economists surveyed
by Thomson Financial/IFR had expected a reading of 49.3.
    A reading above 50 indicates the sector is growing, while a
reading below 50 indicates contraction.
    Citigroup Inc. economist Steven Wieting said he took the reading
with a grain of salt, saying the services report the group puts out
``has a much more limited history'' than its long-running and
important manufacturing index.
    ``Some of the industries that showed up in the 'improving'
column were construction and real estate,'' Wieting said. ``I'm
sure we're going to see that someday. I'd just like confirmation.''
    The services sector accounts for almost 70 percent of the
nation's economy, but the report contrasts with recent economic
indicators suggesting weakness, such as declining auto sales, chain
store sales and employment data.
    The Institute for Supply Management's recent reading of the
manufacturing sector contracted in April, stalled near its lowest
level in five years.
    Even with the positive reading for the service economy, ``I
think it indicates that the non-manufacturing sector is bordering
on zero growth,'' said Dan Meckstroth, chief economist of the
Manufacturers Alliance, a trade group. ``It fits with a scenario of
a very mild recession.''
    The services index fell steeply in January to 44.6, its first
drop below 50 since March 2003, and was below 50 in February and
March.