Growth in U.S. service sector activity slowed by more than expected in the month of October, according to a report released by the Institute for Supply Management on Wednesday.
The ISM said its services PMI dipped to 56.6 in October from 57.8 in September, although a reading above 50 still indicates growth in the service sector. Economists had expected the index to edge down to 57.5.
“There has been a slight pull back in the rate of growth in the Services Sector in the month of October,” said Anthony Nieves, Chair of the ISM Services Business Survey Committee.
“Respondents’ comments are cautiously optimistic about business conditions and the economy,” he added. “There is a degree of uncertainty due to the pandemic, capacity constraints, logistics and the elections.”
The bigger than expected decrease by the headline index came as the new orders index slid to 58.8 in October from 61.5 in September and the business activity index dropped to 61.2 from 63.0.
The report said the employment index also fell to 50.1 in October from 51.8 in September, suggesting employment in the service sector was nearly unchanged.
Meanwhile, the ISM said the prices index jumped to 63.9 in October from 59.0 in September, indicating a notable acceleration in the pace of price growth.
The ISM released a separate report on Monday showing growth in U.S. manufacturing activity accelerated by much more than expected in the month of October.
The purchasing managers index climbed to 59.3 in October from 55.4 in September, with a reading above 50 indicating growth in manufacturing activity. Economists had expected the index to inch up to 55.8.
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