A trade group's measure of the health of the U.S. service sector likely rose for a second straight month in October as consumer spending ticks higher, a crucial ingredient for a strong rebound from the recession.

The Institute for Supply Management's service index likely edged up to 51.5, from 50.9 in September, according to analysts polled by Thomson Reuters.

Any reading above 50 signals growth in the service sector. That threshold was broken in September for the first time in 13 months. A reading of 51.5 would be the strongest since April 2008.

The ISM measure tracks more than 80 percent of the country's economic activity, including hospitals, retailers, financial services companies and truckers. The service sector is highly dependent on consumer spending, which powers about 70 percent of the economy.

The Commerce Department last week said consumer spending dropped 0.5 percent in September, the first decline in five months. Meanwhile, Americans' personal incomes, which power future spending, fell slightly. Wages and salaries also dipped.

October's retail sales for major chains are expected to be flat or rise up to 1 percent, according to the International Council of Shopping Centers-Goldman Sachs index.

There had been some gains in spending earlier in the third quarter as the government funneled money to consumers for new car purchases and issued a tax credit for first-time homebuyers. But the Cash for Clunkers program ended in August, while the homebuyers credit is scheduled to expire at the end of this month. Congress is moving to extend the credit until April 30.

The end of big stimulus programs is raising questions about the sustainability of consumers' willingness to spend given rising unemployment and hard-to-get loans.

But businesses are finally starting to spend again, according the government. Spending on equipment and software rose 1.1 percent in the third quarter, the first increase in nearly two years. Continued...