The Services Purchasing Managers' Index (PMI) registered 56.7 percent, 0.2 percentage points lower than the August reading, according to the latest Services ISM Report on Business.
Any reading above 50 percent indicates the services sector is generally expanding.
"Most of the details indicate just that: continued growth with some modest give back in the pace of activity," Tim Quinlan and Shannon Seery, economists at Wells Fargo Securities, said in an analysis.
The New Orders Index figure of 60.6 percent is 1.2 percentage points lower than the August reading. The Supplier Deliveries Index registered 53.9 percent, 0.6 percentage points lower than that reported in August, indicating faster deliveries and improved supply chain situation.
"Easing supply chains continue to provide some relief, and a rebound in the employment component signals another steady month of hiring," said Quinlan and Seery.
The Employment Index registered 53.0 percent, 2.8 percentage points higher than the previous month, the ISM report showed.
A business executive from the Professional, Scientific & Technical Services industry, however, noted that hiring continues to be a challenge across most industry sectors.
"There are far more open roles than candidates to fill them. Due to inflationary concerns, companies are being cautious about hiring direct employees and are attempting to utilize contingent labor. The lack of candidates willing to fill temporary positions is making this strategy difficult to execute," said the executive.
A business executive from Accommodation & Food Services industry, meanwhile, said "sales at our restaurants seasonally trend down from August to October, and this year seems to be more severe compared to before the pandemic."
"General inflation concerns and consumer uncertainty are the likely causes, expressed by industry peers as well," the executive said.
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