Financial News: U.S. Service Sector Growth Slows More Than Expected

U.S. Service Sector Growth Slows More Than Expected In October

11/03/2023 - 11:11:00 (RTTNews)

(RTTNews) - A report released by the Institute for Supply Management on Friday showed a bigger than expected slowdown in the pace of growth in U.S. service sector activity in the month of October.

The ISM said its services PMI fell to 51.8 in October from 53.6 in September, although a reading above 50 still indicates growth. Economists had expected the index to edge down to 53.0.

The bigger than expected decrease by the headline partly reflected a notable slowdown in the pace of growth in business activity, with the business activity index tumbling to 54.1 in October from 58.8 in September.

The employment index also slumped to 50.2 in October from 53.4 in September, indicating a slowdown in the pace of job growth in the service sector.

A separate report released by the Labor Department earlier in the day showed the private service-producing sector added 110,000 jobs in October following an increase of 218,000 jobs in September.

Meanwhile, the ISM said the new orders index jumped to 55.5 in October from 51.8 in September, pointing to an acceleration in the pace of growth in new orders.

The report also said the prices index edged down to 58.6 in October from 58.9 in September, coming in below 60.0 for the eighth straight month.

"Sentiment among Business Survey Committee respondents' comments is mixed, with some optimistic about the current steady and stable business conditions and others concerned about such economic factors as inflation, interest rates and geopolitical events," said Anthony Nieves, Chair of the ISM Services Business Survey Committee.

The ISM released a separate report on Wednesday showing manufacturing activity in the U.S. unexpectedly contracted at a faster rate in the month of October.

The manufacturing PMI fell to 46.7 in October from 49.0 in September, with a reading below 50 indicating a contraction. Economists had expected the index to come in unchanged compared to the previous month.

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