NEW YORK, Mon Nov 5, 2012 – The pace of growth in the U.S. services sector slowed modestly in October, though a measure of employment improved to its highest in seven months, underscoring expectations the economic recovery will remain modest.
The Institute for Supply Management said its services index eased to 54.2 last month from 55.1 in September, shy of economists’ forecasts for 54.5, according to a Reuters survey.
A reading above 50 indicates expansion in the sector.
The forward-looking new orders gauge fell to 54.8 from 57.7, but the measure of employment rose to its highest since March at 54.9 from 51.1.
The vast services sector has fared better than its manufacturing counterpart, which contracted during the summer. Still, this was the first time since June that the rate of growth in services firms has cooled.
While manufacturing has begun to grow again, the services sector is expected to remain stronger as it feels less of an impact from weaker exports.