Service sector continues to slow

Service firms employing 90% of the U.S. work force expanded at a slightly slower pace in September than the previous month. Meager pay increases and higher costs for food and gas have forced Americans to spend more carefully. The decline in spending is hurting the service industry, which covers a range of businesses, from hotels and restaurants to financial firms and retailers. The Institute for Supply Management reported today that its service sector index dipped to 53, from 53.3 in August. Any reading above 50 indicates expansion for the sector. A measure of employment fell below 50, suggesting firms cut staff last month. The index reached a five-year high of 59.7 in February; it has weakened consistently since then and in July fell to its lowest level in 17 months. Federal Reserve Chairman Ben Bernanke said Tuesday the economic recovery “is close to faltering.” The economy is growing more slowly than the Federal Reserve had expected, he said, and the biggest factor depressing consumer confidence is poor job growth. Read more from The Associated Press on the service sector report here.