US services firms grow more slowly, but hiring up
Subscribe for unlimited digital access.
Try one month for $1!
Subscribe for unlimited digital access. Try one month for $1!
WASHINGTON — U.S. services firms expanded more slowly in October, but the pace of growth was still healthy. Hiring also rose to the fastest pace in more than nine years.
The Institute for Supply Management said Wednesday that its services index dropped to 57.1 in October, down from 58.6 in September. That was the second straight drop after the index had risen steadily since February to 59.6 in August, the highest in eight years. Any reading over 50 indicates expansion.
Steady hiring this year means more Americans are earning paychecks, which supports spending at retail stores, hotels and other service companies. Wednesday’s data indicates that growth among service firms is cooling off a bit after rapid expansion earlier this year.
The ISM is a trade group of purchasing managers. Its survey of services firms covers businesses that employ 90 percent of the American workforce, including retail, construction, health care and financial services firms.
A gauge of hiring rose to 59.6, its highest level in nine years. That increase suggests that Friday’s government report on jobs and unemployment could show another strong gain.
Still, there were plenty of signs that growth among service firms may have reached a plateau after accelerating for most of this year. A gauge of new orders fell nearly two points to 59.1, and a measure of order backlogs also fell.
“The majority of the respondents’ comments reflect favorable business conditions,” said Anthony Nieves, chair of the ISM’s services index committee. “However, there is an indication that there continues to be a leveling off from the strong rate of growth of the preceding months.”
New export orders fell sharply, to 53.5 from 57.5 in September, a sign that slowing growth overseas is beginning to impact U.S. firms. However, most of the firms responding to the survey are focused on the U.S. market and don’t have any international business. Only about 35 percent said they had any overseas sales.
BY CHRISTOPHER S. RUGABER, AP Economics Writer