By Bob Willis Feb. 3 (Bloomberg) -- Service industries in the U.S. expanded in January for the first time in three months, a sign the recovery is broadening. The Institute for Supply Management’s index of non- manufacturing businesses, which make almost 90 percent of the economy, rose to 50.5, less than forecast and the highest level since May 2008, from 49.8 in December, figures from the Tempe, Arizona-based group showed. Readings above 50 signal growth. Other reports today showed firings slowed. Growing exports and efforts to stabilize inventories stoked a factory rebound six months ago that is strengthening and spreading to other areas, giving companies like United Parcel Service Inc. a lift. The recovery has yet to generate the jobs needed to boost consumer spending back to pre-recession levels, one reason why the Federal Reserve has pledged to keep interest rates low. “The economy is coming along in this slow, cyclical recovery,” Jerry Webman, chief economist at OppenheimerFunds Inc. in New York, said before the report. “Job creation is the big demand creator and it’s important that services create more jobs.” The figures compared with economists’ median forecast for an increase to 51, according to 75 projections in a Bloomberg News survey. Forecasts ranged from 49 to 53. Companies cut an estimated 22,000 jobs in January, in line with forecasts and the smallest drop in two years, data from ADP Employer Services showed today. ADP figures overstated the Labor Department’s estimate of private payroll losses by almost 500,000 in the six months to December. Planned firings fell 70 percent last month to 71,482 from 241,749 in January 2009, according to data collected by the job placement firm Challenger, Gray & Christmas Inc. Announcements increased from a two-year low of 45,094 in December, the Chicago-based firm said today. To contact the reporter on this story: Bob Willis at bwillis@bloomberg.net

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