NEW YORK – The massive U.S. service sector expanded for the ninth straight month in October, though at a slightly slower pace than in September, a report said Tuesday, in another sign the economic recovery has lost momentum.
Coming on top of a flood of weak economic news in recent weeks, the evidence that services growth slowed in October supported expectations that the Federal Reserve will make a modest cut in short-term interest rates at its regular policy meeting Wednesday to shore up the wobbly recovery.
The Institute for Supply Management said its monthly index of non-manufacturing activity fell in October to 53.1 from 53.9 in September, above forecasts for a decline to 51.7. A number above 50 indicates growth in the sector, which makes up roughly 80 percent of the U.S. economy.
The new orders index, a barometer of future growth, fell to 50.9 in October from 52.3, while the employment index fell further to 46.2 from 46.6.
ISM compiles its diffusion index by surveying more than 370 purchasing executives in more than 60 service industries once a month. The responses reflect the change in the current month compared to the previous month. A similar index from ISM last week showed that manufacturing contracted for the second straight month in October, fueling concerns the U.S. recovery is close to stalling.