U.S. ISM Services Index Fell to Record Low Last Month
By Shobhana Chandra and Bob Willis
Dec. 3 (Bloomberg) -- U.S. service industries contracted in November at the fastest pace on record, sinking the economy deeper into what may become the worst recession in decades.
The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, fell to 37.3, the lowest level since records began in 1997, from 44.4 the prior month, the Tempe, Arizona-based ISM said. Readings below 50 signal contraction.
Americans, hurt by mounting job losses, a lack of credit and falling home and stock values, are losing confidence and cutting spending on everything from cars and furniture to food and vacations. Slumping sales are prompting even more job cuts, signaling the economic slump will persist well into 2009.
“Business activity has shut down, along with the consumer,” Stephen Gallagher, chief economist at Societe Generale in New York, said in an interview with Bloomberg Television. “There is no reason for an immediate turnaround; financial markets have not stabilized; consumers have not stabilized.”
The index was projected to decline to 42, according to the median forecast in a Bloomberg News survey of 64 economists. Estimates ranged from 37 to 46.5.
Stocks retreated further after the report. The Standard & Poor’s 500 Index was down 113 percent, to 838.4, at 10:18 a.m. in New York. Treasury securities fell as investors judged the rally that pushed yields to record lows was unsustainable amid government efforts to revive growth.
Keep in mind that the Non-manufaturing segment of our economy now represents approximately 70% of the whole.