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Saturday 06th of December 2008
December 3, 2008

US service sector falls to record low


by Kay Murchie
”US

Figures published by the Institute for Supply Management (ISM) have revealed that the US service sector hit the lowest level on record last month.

The index fell far more than expected to 37.3 in November from 44.4 the previous month and is the lowest level since the series began in the 1997.

The US service sector, which accounts for around 80% of US economic activity, includes banks, accountants and hotels.

Readings below 50 in the index, indicates a contraction in activity

According to Pierre Ellis at Decision Economist, the decline in activity is ‘extraordinarily steep’ and the damage to the service industry is another indication of the extraordinary force of this recession.

Meanwhile, official US figures showed that a quarter of a million private sector jobs were lost in the US last month - the biggest number of losses in seven years, since the aftermath of the 9/11 terrorist attacks.

Earlier this week, the National Bureau of Economic Research said that the US entered a recession at the end of last year. Following the statement, the US Federal Reserve Chairman, Ben Bernanke, hinted that US interest rates could be lowered to below 1% later this month.

In related news, the UK services sector, which is the backbone of the economy, is declining at a record rate as the closely monitored Purchasing Managers’ Index (PMI) fell to 40.1 in November from 42.4 in October, the lowest level and fastest decline since the survey started in 1996.

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