The U.S. services sector expanded at a slightly slower pace in October as the non-manufacturing business activity composite index was 54.2 in the month, compared to 55.1 in September, on a seasonally adjusted basis, the Institute for Supply Management reported Monday.
Economists polled by Thomson Reuters had expected a 54.5 level.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.
The prices paid index, closely watched for signs of inflation, slid to 65.6 from 68.1.
The employment index increased to 54.9 from 51.1.
The business activity/production index fell to 55.4 from 59.9, the new orders index was at 54.8, down from 57.7; backlog of orders increased to 49.0 from 48.0; new export orders slid to 47.5 from 50.5; inventories fell to 46.5 from 48.5; inventory sentiment dipped to 64.0 from 65.0; the supplier deliveries index remained at 51.5; and imports slipped to 49.5 from 50.0.
Members' general comments on business in the month included:
"Business with markets and customers we serve remains strong." (Management of Companies & Support Services)
"Business is steady, with good fourth quarter expected." (Information)
"The sluggish pace of economic recovery coupled with rapid increases in gas prices on the West Coast continue to drag down customer traffic and discretionary spending. Levels remain well below last year." (Arts, Entertainment & Recreation)
"Ongoing concerns about healthcare reform; reluctance to expand or hire." (Health Care & Social Assistance)
"Outlook is positive yet still guarded. Clients have some pent-up demand that they are acting on with short-term contracts." (Professional, Scientific & Technical Services)
"More companies seeking relief from fuel increases." (Public Administration)