Reflecting a slight cooling off after a record month in September, the Institute for Supply Management released a report on Monday showing a modest slowdown in the pace of growth in U.S. service sector activity in the month of October.
The ISM said its non-manufacturing index dipped to 60.3 in October after climbing to 61.6 in September, although a reading above 50 still indicates growth in the service sector. Economists had expected the index to drop to 59.3.
Last month, the ISM said the non-manufacturing index unexpectedly rose in September, reaching its highest level since the inception of the composite index in 2008.
The pullback by the headline index partly reflected a slowdown in the pace of growth in business activity, with the business activity index sliding to 62.5 in October from 65.2 in September.
The employment index also fell to 59.7 in October from 62.4 in September, pointing to a slowdown in the pace of job growth in the service sector.
However, the Labor Department released a report last Friday showing employment in the service-providing sector jumped by 179,000 jobs in October after rising by 79,000 jobs in September.
The ISM also said the prices index dropped to 61.7 in October from 64.2 in September, indicating slower price growth compared to the previous month.
Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee, said respondents are "positive about current business conditions and the economy" but noted there are "continued concerns about capacity, logistics and tariffs."
Last Thursday, the ISM released a separate report showing a bigger than expected slowdown in the pace of growth in manufacturing activity in October.
The ISM said its purchasing managers index dropped to 57.7 in October from 59.8 in September, while economists had expected the index to edge down to 59.0.
With the much bigger than expected decrease, the manufacturing index fell to its lowest level since hitting 57.3 in April.