Service industries in the United States expanded in September at a slower pace than forecast, indicating a pause in the momentum of the biggest part of the economy before the federal government shut down.
The Institute for Supply Management's non-manufacturing index dropped to 54.4 from the prior month's 58.6, the biggest decrease since November 2008, the group said today.
A reading above 50 shows expansion.
A recent rise in mortgage rates may be tempering progress in the housing market, while the first government shutdown in 17 years threatens to slow demand for everything from auto purchases to air travel.
At the same time, a report this week showing the fastest pace of manufacturing since April 2011 is helping underpin demand for services.
The ISM non-manufacturing gauge, which fell to the lowest level since June, is hovering near the 54.7 average since the end of 2011. In August, the measure surged to the highest level since at least January 2008.
"We had such a spike (in August) that with this coming off to these levels, there's still pretty good indication that there's still growth going on," Anthony Nieves, chairman of the survey, said.
The figure includes industries that range from utilities and retail to health care, housing and finance and make up almost 90% of the economy.
The ISM's measure of new orders in the service industries decreased to 59.6 in September from 60.5 in August.
A gauge of employment at non-manufacturing companies dropped to 52.7, the weakest since May, from 57. Nine industries reported gains in employment, while seven said it fell.
Business activity slumped to 55.1 from 62.2, the report showed. Twelve industries reported increased activity, while five said it decreased.
The ISM's manufacturing index, released earlier this week, unexpectedly rose to 56.2, the strongest since April 2011, from 55.7 a month earlier, as employment and production measures improved.
Service industries in other parts of the world are showing signs of improvement. Services in the UK expanded in September, capping the best quarter for the industries in 16 years.
A gauge of activity was at 60.3 after reaching a seven- year high of 60.5 in August, Markit Economics said today in London.
Euro-area services grew more than initially estimated and a Chinese gauge rose to a six-month high, separate reports showed.