Service growth cools from its near-record level

A gauge of U.S. service industries fell by less than forecast in October from a near-record level, suggesting the economy’s momentum is holding up this quarter, an Institute for Supply Management survey showed Monday.

The non-manufacturing index declined to 60.3 (est. 59) from 61.6; readings above 50 indicate expansion. The measure of business activity slipped to 62.5 from a 14-year high of 65.2 the prior month, while the employment gauge declined to 59.7 from a record 62.4.

The index — which covers sectors representing about 90 percent of the economy — indicates growth is on track to remain solid in the fourth quarter after posting the best back-to-back periods since 2014, and also helps explain Friday’s strong employment report. The business activity index, one of four components of the main gauge, slipped while remaining near the prior reading that was the second-highest in two decades of data.

While companies have flagged concerns about the ongoing trade war and cited higher prices for supplies amid tariffs, the prices-paid index declined to a fourmonth low. The measure of new orders was little changed from the prior month, while exports held at the best level since April. The gauge of order backlogs decreased.

Still, the trade war may be taking a toll on some companies, with an imports gauge falling to the lowest since February. A measure of supplier deliveries rose, signaling that industries continue to face supply bottlenecks when trying to meet strong demand.