By Bob Willis Nov. 4 (Bloomberg) -- Service industries in the U.S. grew in October at a slower pace than anticipated, a sign growing unemployment may restrain consumer spending. The Institute for Supply Management’s index of non- manufacturing businesses fell to 50.6 from 50.9 in September, according to the Tempe, Arizona-based group. Another report showed companies continued to cut staff. Mounting employment may mean consumer spending will only accelerate with government assistance, indicating the emerging recovery may lose momentum as stimulus fades. The lack of jobs makes it more likely Federal Reserve policy makers today will reiterate plans to keep their key interest rate near zero for an “extended period” to prevent a relapse. “The setback in services sector activity is troubling for the economic recovery,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report. “The economy cannot be said to be in recovery mode unless consumers are spending more on services.” The index was projected to increase to 51.5, according to the median forecast of 77 economists surveyed by Bloomberg News. Estimates ranged from 49.2 to 54.4. Fifty is the dividing line between expansion and contraction. The gain in October marks the first back-to-back expansion in non-manufacturing industries, which make up almost 90 percent of the economy, since the two months ended May 2008. A report from ADP Employer Services today showed companies cut an estimated 203,000 jobs in October, the smallest reduction in more than a year.

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