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US services firms grow at fastest pace in 8 years

By WTOP Staff

CHRISTOPHER S. RUGABER
AP Economics Writer

WASHINGTON (AP) — U.S. services firms grew at the fastest rate in more than eight years in July, the latest sign of an economy picking up speed in the second half of the year.

The Institute for Supply Management said Tuesday that its service-sector index jumped to 58.7, up from 56 in June. Any figure above 50 indicates expansion. June’s reading is the highest since December 2005. The ISM is a trade group of purchasing managers.

The services survey covers businesses that employ 90 percent of the workforce, including retail, construction, health care and financial services firms.

The strong reading suggests Americans are increasingly confident about the economy and willing to spend more. Sixteen industries tracked by the survey grew in July, led by construction, educational services and retail. Only utilities said that business slowed last month.

“We are encouraged by the widespread strengthening in demand evident in this survey,” said Paul Dales, an economist at Capital Economics.

Americans are traveling more this summer, boosting the tourism industry, said Anthony Nieves, chairman of the ISM’s survey committee. Construction firms are benefiting from growing demand for renovation and remodeling work, he added.

A measure of overall sales soared to its highest level in more than three years, the ISM said, and a gauge of new orders jumped to its highest reading in nearly eight years.

Faster growth in services should help accelerate growth and hiring. Manufacturing is already growing at a robust pace, while many service industries have lagged. Manufacturing expanded at the fastest pace in nearly three years in July, according to a separate ISM report released Friday. And factories added 28,000 jobs that month, the most in eight months, driven mostly by healthy gains at auto plants.

Yet while Americans are willing to splurge on autos, furniture and other large goods, they have been more frugal when it comes to services such as dining out, financial services and health care. Spending on big-ticket goods jumped 14 percent in the April-June quarter, according to government data. But spending on services rose just 0.7 percent.

That may have held back hiring in July. Services companies added just 140,000 jobs last month, down from an average of 220,000 in the previous three months. But Tuesday’s report, which showed that services firms are hiring at the fastest pace in six months, suggests that could turn around soon.

Overall hiring has picked up strongly this year, which will give more Americans paychecks to spend and likely boost spending on both goods and services.

U.S. employers have added an average of 244,000 jobs a month in the past six months, the healthiest 6-month hiring spree in eight years.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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