Ahead of the Bell: Economy-Services
WASHINGTON (AP) — U.S. service companies likely grew in October but at a slightly slower pace than in September.
The forecast is that the Institute for Supply Management's index for service companies dipped to 54.5 in October, down from a September reading of 55.1, according to a survey by FactSet. The report will be released at 10 a.m. EST on Monday.
In September, the index had climbed to the fastest pace in six months, helped by strong increases in customer demand. Any reading above 50 indicates expansion.
The report measures growth at businesses that employ roughly 90 percent of the U.S. work force, from retail and construction companies to health care and financial services firms. The service sector has grown for 33 straight months.
The overall economy grew at an annual rate of 2 percent in the July-September quarter. That was an acceleration from 1.3 percent growth in the April-June period. Still, the economic expansion is considered too slow to make a significant dent in the unemployment rate.
The government reported Friday that employers added 171,000 jobs in October and hiring was also stronger in August and September than first thought. The unemployment rate rose to 7.9 percent from 7.8 percent in September. The increase mainly reflected the fact that many more people began looking for work last month and not all of them found jobs.
The unemployment report was the last major snapshot of the economy before Tuesday's elections.
President Barack Obama will face voters with the highest unemployment rate of any incumbent since Franklin Roosevelt. Republican challenger Mitt Romney has made high unemployment and the weak economy the major point in his effort to deny Obama a second term.
The ISM reported last week that its separate index for manufacturing showed manufacturing expanded for a second month in October, with a reading of 51.7, up slightly from September's reading of 51.5. Manufacturing had actually contracted from June through August as factories were hit by weak consumer demand in the United States and a slowing global economy which was depressing export sales.
Service companies have been a key source of job growth this year. They have created about 90 percent of the net jobs added since January. Still, many of the new service jobs have been low-paying retail and restaurant positions.