U.S. Economy: Services Growth Accelerated Last Month (Bob Willis and Joe Richter)

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By Bob Willis and Joe Richter

Dec. 5 (Bloomberg) -- Growth in U.S. service industries unexpectedly accelerated in November, easing concerns that a downturn in manufacturing and housing will end the five-year economic expansion.

The Institute for Supply Management's index of non- manufacturing businesses, which account for almost 90 percent of the economy, rose to 58.9 last month, from 57.1 in October. A separate report from the Labor Department today showed wage growth in the third quarter was less than forecast, alleviating a potential source of inflation.

Stocks rose and bonds weakened. Warnings of a slowdown had multiplied last week after figures showed a surprise contraction in manufacturing, an accumulation of stockpiles at companies and an extended decline in home sales.

``The reports of the economy's demise may have been premature,'' said Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania. ``It still does not look as if the problems in housing and motor vehicles have spread into the general economy.''