WASHINGTON - Services, the biggest part of the U.S. economy, expanded in October for a ninth straight month, helping blunt the effects of a manufacturing slump.
The Institute for Supply Management's index for nonmanufacturing businesses fell less than expected, to 53.1 from 53.9 in September. The index has been higher than 50, the point dividing growth and contraction, since February.
"It's getting a little bit better, but it's marginal," said Richard Hochhauser, chief executive officer at Harte-Hanks Inc., the largest U.S. publisher of "shopper" circulars. "We don't see that clear breakaway kind of growth yet."
Sales at retailers' stores open at least a year might have increased as little as 1.5 percent last month compared with those of October last year, which would be the smallest rise since the terrorist attacks, according to Bank of Tokyo-Mitsubishi Ltd.
Though growth at retailers, construction companies and other services has kept the recovery intact, the institute's index has declined since reaching a high this year of 60.1 in May. Services, including government, account for five-sixths of the economy. An index of new orders at service companies declined last month to the lowest since January.
As services slowed in the United States, European service executives became more pessimistic, a survey of more than 2,000 companies found. An expectations index compiled by NTC Research for Reuters Group PLC, fell to 58.9 last month, the lowest in nearly a year, from 64.5 in September. A gauge of current conditions was at 50.1, up from 49.1.
Manufacturing has contracted the past two months, the group's companion survey on factories found.
Economists had expected the service index to fall to about 52.
The institute's new orders index for nonmanufacturing companies fell to 50.9 last month from 52.3 in September. The index of employment declined to 46.2 last month from 46.6 a month earlier. Inventories and export orders also declined.
Order backlogs rose, while the group's index of prices paid, a measure of costs for purchased materials and services, increased to 54 last month from 52.5.
The Dow Jones industrial average rose 106.67 points yesterday.