Service industries in the U.S. kept growing in October, helped by consumer spending gains that are helping bolster the expansion.
The Institute for Supply Management’s non-manufacturing index declined to 54.2 last month from 55.1 in September, the Tempe, Arizona-based group said today. Economists projected 54.5, according to the median estimate in a Bloomberg survey. Readings above 50 signal expansion in the gauge of industries that account for almost 90 percent of the economy.
Retailers Macy’s Inc. and Kohl’s Corp. may keep benefitting from a pickup in hiring and consumer sentiment heading into the holiday shopping season, while homebuilders enjoy a rebound in demand. Meanwhile, manufacturing is being restrained by a global slowdown and a lack of clarity on U.S. fiscal policy that is preventing the economy from strengthening further.
“Things are modestly improving,” Michael Feroli, chief economist at JPMorgan Chase & Co. in New York, said before the report. “We’re not growing as fast as we’d like, but we’re still growing. The U.S. economy is expanding and continues to expand.”
Stocks remained lower after the figures, with the Standard & Poor’s 500 Index falling 0.3 percent to 1,410.49 at 10:21 a.m. in New York. The yield on the benchmark 10-year Treasury note dropped to 1.68 percent from 1.72 percent late Nov. 2.
Economists’ estimates in the Bloomberg survey ranged from 53 to 57. The gauge has averaged 53.4 since the recession ended in June 2009. The Tempe, Arizona-based ISM’s services report is the last piece of economic data before tomorrow’s election, when voters decide between giving President Barack Obama another four years and changing course with Republican challenger Mitt Romney.
The ISM’s manufacturing index on Nov. 1 showed factories expanded in October at a faster pace than projected as orders and production picked up. The gauge rose to a five-month high of 51.7 in from 51.5 the previous month.
The group’s index of non-manufacturing employment climbed to 54.9, the highest since March, from 51.1 in the prior month. A measure of new orders decreased to 54.8 from 57.7. A gauge of business activity fell to 55.4 from 59.9. The index of prices paid decreased to 65.6 from 68.1.
In the U.K., services growth cooled more than economists forecast in October, adding to signs of weakness in the economy at the start of the fourth quarter.