NEW YORK (AP) – The U.S. service sector grew unexpectedly in August for the first time in three months as new orders improved and inflation moderated, a private trade group said Thursday.

The Institute for Supply Management, a trade group of purchasing executives, said the services sector index rose to 50.6 in August from 49.2 in July. It beat economists’ prediction of a reading of 50.0, according to the consensus estimate of Wall Street economists surveyed by Thomson Financial/IFR.

A reading below 50 signals contraction, while a reading above 50 indicates growth.

An improvement over July in production, new orders and deliveries boosted the index.

Although inflation remained elevated, with a reading of 72.9 out of 100, it fell sharply from July, when the reading was 80.8. Prices have been increasing for the last 5 years, according to the survey. Among the commodities up in price are food, plastic pipe, roofing materials, airfares and wine.

Real estate and rentals, mining, health care, education and utilities are all growing, according to the survey, while transportation, finance, hotels and wholesale trade are contracting.