By CHRISTOPHER S. RUGABER
WASHINGTON (AP) -- U.S. service companies grew at a slightly slower pace in October than September because of a decline in new orders. But a measure of employment rose, indicating services firms hired more.
The Institute for Supply Management said Monday that its index of non-manufacturing activity fell to 54.2. That's down from a six-month high of 55.1 in September. Any reading above 50 indicates expansion.
The report measures growth in a broad range of businesses from retail and construction companies to health care and financial services firms. The industries covered employ about 90 percent of the work force.
October's reading matches the 12-month average for the index. The industries reporting the fastest growth were agriculture, construction, management of companies, and finance and insurance.
The overall economy grew at an annual rate of 2 percent in the July-September quarter. That was up from 1.3 percent growth in the April-June period. Still, the growth is considered too slow to rapidly lower the unemployment rate.
Employers added 171,000 jobs in October and hiring was also stronger in August and September than first thought, the government said Friday. The unemployment rate rose to 7.9 percent from 7.8 percent in September. The increase mainly reflected the fact that many more people began looking for work last month and not all of them found jobs.
Service companies have been a key source of job growth this year. They have created about 90 percent of the net jobs added since January. Still, many of the new service jobs have been low-paying retail and restaurant positions.
The unemployment report was the last major snapshot of the economy before Tuesday's elections.
President Barack Obama will face voters with the highest unemployment rate of any incumbent since Franklin Roosevelt. Republican challenger Mitt Romney has made high unemployment and the weak economy the major point in his effort to deny Obama a second term.
The ISM reported last week that manufacturing expanded for a second month in October. The group's index showed manufacturing had contracted from June through August. Factories had struggled over the summer with weak consumer demand in the United States and slower global growth, which depressed export sales.
Copyright 2012 The Associated Press.