U.S. service firms grow at fastest pace since 2006

A closely watched measure of growth in the U.S. economy's service sector rose to its highest level last month in more than four years.

The Institute for Supply Management, a trade group of purchasing executives, said Wednesday its index of service sector activity rose to 57.1 in December, up from 55 the previous month, pushed higher by strong consumer demand.

Any reading above 50 indicates growth.

The index has risen for 12 straight months. Service jobs include industries from health care to retail to financial services.

"Going forward, the service sector which accounts for roughly 90 per cent of the U.S. economy, will continue to be the driving force in bolstering economic growth," Christos Chiamptanis, an economist with TD Economics, said in a commentary.

The index is at its highest point since May 2006.

The index plummeted to 37.2 in November 2008, at the height of the financial crisis.

The report is the latest evidence that the economy is gaining strength.

Earlier Wednesday, payroll services provider ADP said the economy added 297,000 private-sector jobs last month, the biggest increase since the company began tracking employment 10 years ago.

The service sector reading follows a similarly strong reading on U.S. factories. On Monday, the ISM reported that manufacturing activity grew at its fastest pace in seven months.