U.S. service sector grows after hitting 3-year low

WASHINGTON — Growth in the vast U.S. service sector rebounded in October after sinking to a three-year low in September causing concern for investors and economists.

The Institute for Supply Management, an association of purchasing managers, reported Tuesday that its service index grew to 54.7 percent last month, up from 52.6 percent in September. Any reading above 50 signals growth.

The service sector, which accounts for more than two-thirds of U.S. economic activity, has been expanding for 117 straight months, according to the survey-based ISM index.

Measures of sales, new orders and employment all rebounded from the previous month.

Although some companies surveyed for the index say they are still having difficulty finding workers due to a historically low 3.6 percent unemployment rate, measures of employment grew a solid 3.3 percent in October.

Other respondents were upbeat about the holiday season as business activity and new orders both rose nearly 2 percent. Thirteen of 18 industries surveyed reported growth in business activity, while 10 out of 18 reported growth in new orders.

“We exceeded expectations for the month for the most part,” said Anthony Nieves, chair of the ISM’s non-manufacturing business survey committee. He noted that the fourth quarter is typically stronger in the services sector due to the holiday season, adding that respondents were optimistic beyond the quarter.

“We had some good comments from panelists, they were confident about this quarter and going into 2020,” Nieves said.