The massive US service sector expanded for the ninth straight month in October, though at a slightly slower pace than in September, a report said today, in another sign the economic recovery has lost momentum.
Coming on top of a flood of weak economic news in recent weeks, the evidence that services growth slowed in October supported expectations that the Federal Reserve will make a modest cut in short-term interest rates at its regular policy meeting tomorrow to shore up the wobbly US recovery.
The Institute for Supply Management said its monthly index of non-manufacturing activity fell in October to 53.1 from 53.9 in September, above forecasts for a decline to 51.7.
A number above 50 indicates growth in the sector, which makes up roughly 80 per cent of the US economy and includes everything from financial services to transportation and entertainment.
The reading confirmed the gloomy picture in the October payrolls report, released last Friday, which showed a small decline in jobs and an increase in the unemployment rate to 5.7 percent.
A similar index last week showed manufacturing contracted for the second straight month in October, fuelling concerns the US recovery is close to stalling.