UPDATE 1-U.S. service sector growth slips in Oct - ISM

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NEW YORK, Nov 5 (Reuters) - The pace of growth in the U.S. services sector slowed modestly in October as new orders slipped, though employment improved to its highest level in seven months, an industry report showed on Monday.

The Institute for Supply Management said its services index eased to 54.2 last month from 55.1 in September, shy of economists' forecasts for 54.5, according to a Reuters survey.

A reading above 50 indicates expansion in the sector.

The forward-looking new orders gauge fell to 54.8 from 57.7, but the measure of employment rose to its highest level since March at 54.9 from 51.1.

``Moderate growth in the U.S. economy continues,'' said Joseph Trevisani, chief market strategist at Worldwide Markets in Woodcliff Lake, New Jersey.

The vast services sector has fared better than its manufacturing counterpart, which contracted during the summer. Still, this was the first time since June that the rate of growth in services firms has cooled.

New export orders contracted to 47.5 from 50.5 against the backdrop of slower global growth and the euro zone's ongoing debt crisis.

Financial markets saw little reaction immediately following the data. Wall Street was slightly lower in early morning trading as investors were wary of taking aggressive bets the day ahead of the U.S. presidential election.

(Reporting by Leah Schnurr, additional reporting by Ryan Vlastelica; Editing by Chizu Nomiyama)