WRAPUP 2-U.S. services sector grows, job losses decline

* U.S. service sector grows, but slower than forecast

* U.S. private sector job losses lowest since July 2008

* U.S. planned layoffs fewest since March 2008

* U.S. mortgage applications rise for first week in four (Adds ISM services data)

By Chris Reese and Richard Leong

NEW YORK, Nov 4 (Reuters) - The U.S. services sector, which represents about 80 percent of U.S. economic activity, grew for the second consecutive month in October, while the labor market also showed signs of improvement in data published on Wednesday.

The U.S. Institute for Supply Management's services index slipped to 50.6 last month from 50.9 in September, below economists' median forecast for a rise to 51.5, with thedividing line between growth and contraction being 50.

Although the report showed growth in the sector, analysts were disappointed in the employment index, which fell to 41.1 in October from 44.3 in September.

"It's disappointing that it didn't hit the consensus number but the good news is that the index stayed above 50," said John Canally, economist, with LPL Financial in Boston.