updated 5/3/2006 10:36:03 AM ET 2006-05-03T14:36:03

The nation’s service sector managed to withstand rising energy prices in April, expanding in yet another sign of the economy’s persistent strength, a private survey of supply managers said on Wednesday.

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The Institute for Supply Management said that its index of non-manufacturing activity stood at 63, up from 60.5 in March. The reading beat analysts’ expectations of 59.2.

A reading of 50 and above points to a growing service sector, while a figure below 50 signals contraction.

Soaring energy costs appear not to have affected the service economy, but higher prices for gasoline and raw materials might manifest themselves later on, said Mark Vitner, an economist at Wachovia Securities. He noted that the price of gas didn’t become an issue until mid-April, so it may be too early to see any evidence of the fallout.

Recent data including the ISM’s report on manufacturing released Monday have indicated the economy remains strong enough that there are still concerns that the Federal Reserve will extend its series of interest rate hikes. At the same time, there is great anxiety that if oil prices remain in the mid-$70 range and gasoline continues to sell above $3 a gallon, it will inevitably force consumers and businesses to cut back.

Vitner said the service sector’s resilience is a reflection of continued activity in the building industry and of strong retail sales. He said the mild weather also helped because it gave consumers an incentive to shop for items ranging from spring clothes to gardening supplies and hardware.

Business has been strong at ABM Industries which provides services such as security and maintenance to various companies, according to company executive vice president Scott Salmirs. He said revenues are up about 6 percent since a year ago.

“The economy is still going strong, so we are doing well,” said Salmirs, who manages the company’s East coast region, ranging from Boston to Florida. He said he has hired about six junior executives recently and is still looking for another two or three.

Salmirs said some of his suppliers asked for a surcharge on deliveries to cover rising gas prices over the last two or three months. He said they backed off, however, when he insisted the gas price be noted on invoices, so the charge could be removed when energy prices declined.

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