NEW YORK The nation's service sector showed further expansion in November, but at a pace slower than the month before and below analysts' expectations.
The latest figures provided more evidence that the nation's economy has been cooling in the face of higher oil prices and a tighter credit market.
The Institute for Supply Management, a business group based in Tempe, Ariz., said Wednesday that its index measuring performance in non-manufacturing industries registered 54.1 in November, compared with 55.8 in October. Analysts surveyed by Thomson/IFR had projected a reading of 54.8 for last month.
A reading above 50 indicates expansion, while one below 50 shows contraction.
The November reading was the lowest since the index registered 52.4 last March and came as both new orders and employment grew at slower rates than in the previous month. Prices, meanwhile, rose at a faster rate.
Anthony Nieves, chairman of the institute's business survey committee, said in a statement accompanying the report that "the overall indication in November is continued economic growth in the non-manufacturing sector, but at a slower pace than in October."
He said that those surveyed were "concerned about the economy."
In Washington, meanwhile, the Labor Department reported that worker productivity, the amount of output per hour of work, rose at an annual rate of 6.3 percent in the third quarter the fastest pace in four years.
The Commerce Department said U.S. factories unexpectedly rose in October, although much of the gain reflected higher energy prices.
The reports buoyed the stock market, where the Dow Jones industrial average was up 132.50, or 1 percent, at 13,381.23 in late morning trading. The Nasdaq composite index and S&P 500 also advanced.
Keith Hembre, chief economist with First American Funds in Minneapolis, said the figures were consistent with projections that the U.S. economy is growing at a slower rate in the current quarter than in the July-September period. He estimates growth at an annual rate of 0.5 percent in the current quarter, down from 4.9 percent in the third quarter.
The weakness means the Federal Reserve "is likely to cut" interest rates further at its meeting next week, Hembre said.
The ISM report said 10 service industries reported growth in November: information; retail trade; real estate and rental; public administration; miscellaneous services; construction; wholesale trade; health care and social assistance; professional, scientific and technical services; and utilities.
The new orders index registered 51.1 in November, down from 55.7 in October while the employment index weakened to 50.8 last month from 51.8 the month before. The index of export orders softened to 55.5 from 56.0.
Prices shot up, with the price index registering 76.5 in November compared with 63.5 in October. That was the highest reading since 80.5 in September 2005, the institute said.
Hembre said the strong increase in prices reflected the run-up in November in energy costs and "higher prices paid by importers as a result of the currency movement." The dollar has weakened in recent months against most foreign currencies.