WASHINGTON — The U.S. service sector expanded in February at the fastest pace in more than five years and firms hired at the quickest rate since before the recession.

The report from the Institute for Supply Management offered the latest sign that job growth could accelerate this year.

The trade group's service-sector index, which covers about 90 percent of the work force, rose to 59.7 last month, from 59.4 in January. That's the sixth straight monthly increase and the highest reading since August 2005. Any reading above 50 indicates expansion.

The service sector is broadly defined by the trade group, covering a range of industries from retail to health care to financial services. The index plummeted to 37.6 in November 2008, at the height of the financial crisis.

Hiring by service-sector companies rose to the highest level since April 2006, a separate index in the report noted.

The report is "yet another indicator corrobating the idea that ... current and future production levels necessitate the hiring of additional employees," said Dan Greenhaus, chief economic strategist at Miller Tabak.

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On Tuesday, the trade group said its index that tracks the manufacturing sector expanded in February at the fastest pace in nearly seven years. Both reports showed that businesses are paying higher prices for raw materials and other goods. That puts pressure on those companies to pass on the greater costs to consumers, or to accept lower profits.

Prices rose for gasoline, food and beverages, coffee, and fiber optic cables, the service-sector report said.

Other economic indicators released Thursday were also positive. The number of people applying for unemployment benefits dropped sharply last week, a sign that hiring is likely to accelerate this year.

Applications for unemployment benefits fell by 20,000 to a seasonally adjusted 368,000, the Labor Department reported Thursday. It was the third decline in the last four weeks. Applications are now at their lowest level since May 2008.

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