BLBG: U.S. Service Industries Contracted at Faster Pace in February
Service industries in the U.S. contracted at a faster pace in February as job losses sapped consumer confidence and spending.
The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, fell to 41.6 from 42.9 in January. Readings below 50 signal contraction.
Companies from retailer J.Crew Group Inc. to financial- services firm JPMorgan Chase & Co. have slashed payrolls and spending as consumers retrench, fueling more cutbacks and weakening confidence further. President Barack Obama has pledged to create jobs and help Americans keep their homes, and Federal Reserve Chairman Ben S. Bernanke yesterday said policy makers may need to expand aid to the banking system.
“We’re well within recessionary levels,” Sam Bullard, an economist at Wachovia Corp. in Charlotte, North Carolina, said before the report. “Consumer spending is just not in the cards right now.”
Economists forecast the Tempe, Arizona-based ISM’s services gauge would fell to 41, according to the median of 70 projections in a Bloomberg News survey. Estimates ranged from 37 to 44.
Companies in the U.S. cut an estimated 697,000 jobs in February, a report from ADP Employer Services today showed. Job cuts announced by U.S. employers more than doubled from the same month a year earlier, placement firm Challenger, Gray & Christmas Inc. also said today.
To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net
