U.S. services companies grew at a slower pace in October, although the economy appears poised to continue expanding.
The Institute for Supply Management said Thursday that its services index fell to 54.8 last month, down from 57.1 in September. Still, any reading above 50 signals growth.
New orders, production, and employment were positive in October, although each of these categories decelerated. The firms surveyed for the index largely reported growth, although one health care company noted some “uncertainty” due to the impact of rising Obamacare costs and another food company noted some trouble from rising avocado prices.
The slower growth is a possible sign that the October jobs report being released Friday might not deliver the 170,000 jobs expected by most analysts, noted Jennifer Lee, a senior economist at BMO Capital Markets.
The ISM index was positive without generating much enthusiasm, she said.
“The overall tone was mixed,” she said, “lots of ‘steady as she goes’ themes.”
Services firms have now grown for 81 straight months. These companies account for the bulk of employers and economic activity, shielding many workers from the slowdown in manufacturing earlier this year.
The ISM is a trade group of purchasing managers. Its services survey covers businesses that employ the vast majority of workers, including retail, health care and financial companies.