DATA SNAP: Service Sector Growth Disappoints In October

=============================================== 
ISM Non-Mfg Index              !              ! 
                   Oct    Sep  ! Forecast:    ! 
 PMI              50.6   50.9  !    PMI 52.0  ! 
 Business         55.2   55.1  ! Actual:      ! 
 Employment       41.1   44.3  !    PMI 50.6  ! 
 Prices           53.0   48.8  !              ! 
=============================================== 
 
   By Michael S. Derby 
   Of DOW JONES NEWSWIRES 
 

NEW YORK (Dow Jones)--U.S. service sector growth slowed in October, amid more lost ground in hiring.

The Institute for Supply Management reported Wednesday that its overall nonmanufacturing index moved to 50.6 in October, from 50.9 in September, while its business activity/production index hit 55.2, after the prior month's 55.1.

The overall index, which comprises mainly the service sector activities that make up the strong majority of total American economic output, was expected to hit 52.0 in October. Readings over 50 indicate growth and describe the breadth of the expansion, but not the magnitude of the change seen by survey respondents.

"Respondents' comments remain mixed and are mostly cautious about business conditions and the overall economy," said Anthony Nieves, who directs the survey for the private research group.

The nonmanufacturing report comes on the heels of its much improved sister report on manufacturing, which rebounded to levels last seen in the spring of 2006, amid the first rise in hiring in over a year. The reports together help show an economy that is emerging from the worst economic downturn of the post-war era. But the relative weakness of the service sector report shows the tepid nature of the recovery.

The nonmanufacturing report's details were mixed. The employment index showed a quickening pace of job losses, at a reading of 41.1, from September's 44.3, while the new orders index was 55.6, after 54.2 the month before.

Meanwhile, inflation pressures grew again, with the prices index coming in at 53.0. It stood at 48.8 in September.

 
   -By Michael S. Derby, Dow Jones Newswires, 212-416-2214 
michael.derby@dowjones.com 
 

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November 04, 2009 10:14 ET (15:14 GMT)


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