The service sector of the United States inched closer to growth last August 2009, analysts say, but have still contracted for the 11th straight month due to significantly lesser consumer spending. The Institute for Supply Management reported that its service index came in at 48.4, two percentage points above last month’s index of 46.4. This service index covers hospitals, retailers, financial services companies and many more. Though this was the best forecast that the sectors have had in months, the index is still below 50, which indicated that the sector is still contracting.

Most retailers posted sales declines as shoppers held back on their back-to-school purchases even though companies have focused more on offering necessities and doing away with other unimportant stuff. Thirty-one retailers’ monthly results compiled by The International Council of Shopping Centers and Goldman Sachs showed that sales fell 2.1% in August as compared to the results in August a year ago. But the results are still 4% below what analysts expected.

Among the 30 stores surveyed, half missed on their forecasts while the other half topped theirs, according to a poll by Thomson Reuters. Discount stores are the biggest winners but declines among other stores were still less than what was expected.

Discounter Target Corp and warehouse club operators Costco Wholesale Corp and BJ’s Wholesale Club Inc said sales at established stores are still down, but still managed to beat analyst expectations. TJX Companies, operators of discount chains TJMaxx and Marshall’s, experienced a 5% jump, which was better than what analysts expected. Upscale retailers like Saks Inc and Nordstrom Inc also struggled for the month of August.

The real winners in the ISM survey conducted were real estate, health care and social assistance, which gained and beat analysts’ forecasts; while 12 other industries in the service sector contracted, most especially companies offering management and support services to other businesses.

If businesses in the service industry expect any recovery, consumers must increase their spending because it accounts for about 70% of economic activity, making it a crucial part of the over-all recovery of the U.S. economy. Though the results show over-all declines, analysts say that there are indicators that the recession may be passing its prime.