Service Sector Growth Slow, But Solid

Growth in the nation's service sector is solid but a little slower this month than in September. The services PMI flash for October came in at 54.4 for the slowest rate of growth since the severe weather of January. The report cites a third straight slowdown in new business which is also at its weakest point since January. Though the service sector is insulated to a degree from foreign effects, the report does note that less favorable global conditions are making customers less willing to spend.

Backlogs are down for a third month which is the worst run in two years and hiring has slowed to the weakest level since February. The outlook, though still favorable, is near a three-year low. Price data show little change for inputs and only a fractional gain for prices charged. This report fits in with the general soft tone of economic data, softness that will perhaps be a key focus of tomorrow's FOMC statement.

Recent History Of This Indicator:
The services PMI flash has been holding solidly above 50 as domestic demand has yet to show any significant slowing from weakness in global demand. Employment, repeatedly described as robust in this report, has been an upside outlier. Not an outlier are final prices which in the September report posted their first back-to-back contraction in the six-year history of the report. A small 3 tenths decline to 55.3 is expected for the October flash.