By Austen Hufford

The U.S. service sector grew for the eighth consecutive month in October, a sign that Americans continue to spend amid improving economic conditions.

Markit Economics' services purchasing managers index rose to 54.8 last month, compared with 52.3 in September, the fastest pace of expansion since November 2015. Readings above 50 represent expansion while results below that level denote contraction.

Economists surveyed by The Wall Street Journal had expected 54.5.

Markit's report on the service sector is a snapshot of domestic demand, measuring the health of a sector that comprises most American jobs.

Despite service providers being more upbeat about their growth prospects in the year ahead, job creation picked up only slightly from September's three-and-a-half year low.

There was a sharper pace of input cost inflation, with the rise in the average cost burdens being the fastest since July 2015, increasing from the 19-month low recorded in September.

"Indications of stronger economic growth, solid job creation, rising prices and improved business confidence all pave the way for the Fed to hike interest rates again by the end of the year," IHS Markit Chief Business Economist Chris Williamson said.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

November 03, 2016 11:01 ET (15:01 GMT)

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