U.S. Service Sector Growth Quickens in October

By Steven C. Johnson

NEW YORK -- U.S. service-sector business activity picked up in October and firms took on workers despite a partial government shutdown, but new order growth slowed for a second straight month, an industry report on Tuesday showed.

The Institute for Supply Management said its services index rose a point to 55.4 last month. Economists had expected it to slip to 54.0. A reading above 50 indicates expansion

While last month's reading was below the near eight-year high of 58.6 reached in August, it was notable for having climbed despite a political standoff in Washington that forced a partial government shutdown for the first 16 days of October.

The employment index rose to 56.2, bringing it closer to the six-month peak hit in August. It slipped to 52.7 in September. %VIRTUAL-article-sponsoredlinks%But the forward-looking new orders component fell for a second month running, checking in at 56.8 in October from 59.6 the prior month.

The data comes days after the ISM's national factory index showed U.S. manufacturing grew at its fastest pace last month in 2½ years.

Overall, however, recent U.S. economic data has been mixed, and growth is expected to have slowed to a 1.9 percent rate in the third quarter from 2.5 percent between April and June.

The Federal Reserve has said the timing of a decision to begin scaling back support for the U.S. economy will depend on the way the economy evolves.