Service Sector Records Shocking Contraction

January stats fan recession fears
By Kevin Spak,  Newser Staff
Posted Feb 5, 2008 11:35 AM CST
Breakfast foods and coffee drinks are advertised at the drive through of a McDonald's Corp. restaurant near the Space Needle Seattle Tuesday, Nov. 13, 2007. McDonald's laid the foundation to perk up its...   (Associated Press)
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(Newser) – US service industries took a staggering and unexpected plunge in January, contracting at a pace not seen since the last recession. In today’s non-manufacturing report, which leaked nearly an hour early, the index plummeted from 54.4 to 41.9, far more than the 53 analysts forecast. Stocks fell broadly as a result.

“This is a stunning fall,” one economist told Bloomberg. “If accurate, it’s dire news on the economy.” America isn’t alone: Europe’s service industries look headed the same way. They recorded their slowest growth since 2003 in a separate report released today, which one European economist called “a shocker.”