By AP Business Writer
updated 11/5/2007 11:01:31 AM ET 2007-11-05T16:01:31

The U.S. services sector grew at a faster-than-expected rate in October boosted by strength in new orders, a private research group said Monday.

Major Market Indices

The Institute for Supply Management's index gauging the health of non-manufacturing industries registered 55.8, up from 54.8 in September. A reading above 50 indicates expansion, while one below 50 shows contraction.

The result was stronger than the 54 reading analysts had expected.

The services sector, such as airlines, hair salons, accountants, doctors, dentists and plumbers, has been one of the engines of the economy even as manufacturing has slowed. "Non-manufacturing business activity increased for the 55th consecutive month in October," said Anthony Nieves, chairman of ISM.

The report's components showed growth in orders and slower expansion rates in employment and prices. Nine non-manufacturing industries reported increased activity in October.

Bernard Baumohl, managing director of the Economic Outlook Group, said the strength of the survey was a surprise but cautioned that the state of the services sector is not always the best harbinger of an economic turning point.

"To determine a turning point in the economy you have to look at the goods producing sector, " he said.

"People tend to still go to the dentist and the doctor even when things turn down," he said. "But you can put off a purchase of goods."

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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