U.S. Service Sector Slipped in October

A gauge of U.S. service-sector activity fell in October, a sign of decelerating growth in key sectors of the U.S. economy.

The Institute for Supply Management said on Thursday its nonmanufacturing index fell to 54.8 in October from 57.1 in September. A reading above 50 signals expansion while a reading below 50 indicates contraction.

The index has run above the 50 threshold for 81 straight months. Economists surveyed by The Wall Street Journal had expected an October reading of 56.0. Drops in business activity, new orders and employment pulled the overall reading down.

Americans' spending on services accounts for around two-thirds of overall personal-consumption expenditures, and the service sector provides the bulk of U.S. jobs.

U.S. job growth in September was largely concentrated in service industries such as professional and business services, health care, retail and restaurants and bars.

The Labor Department will release October's jobs figures on Friday. The group's nonmanufacturing index covers a wide swath of business activity including retail trade, construction and services including health care. It has signaled continuous expansion since early 2010.

A separate measure of service-sector activity from private data provider Markit showed its services business activity index rose to 54.8 in October from 52.3 in September.

Write to Anna Louie Sussman at anna.sussman@wsj.com