Service Sector Eased Somewhat in December

By JACK HEALY
The New York Times
Published: Jan 07, 2009

America’s service sector continued to contract last month as the recession deepened, although at a slower pace than a month earlier, according to a report released Tuesday by the Institute for Supply Management.

The Non-Manufacturing Index rose to 40.6 percent in December, 3.3 percentage points higher than its November levels of 37.3 percent, according to the institute. Levels below 50 indicate economic contraction while levels above 50 are a sign of growth.

While the December numbers marked a slight improvement, the report signaled that the economy is still contracting and that more trouble lies ahead for a host of business sectors, including retail, real estate, trade and finance companies.

In a sign of more hard times for America’s housing market, pending home sales across the country fell to their lowest levels in seven years, the National Association of Realtors reported on Tuesday. Home contracts signed in November fell 4 percent from October and were 5.3 percent below last November, according to the association’s Pending Home Sales Index.

“Mounting job losses and very weak consumer confidence deterred home buyers from signing contracts in November,” said Lawrence Yun, the industry group’s chief economist, in a statement.

Signed contracts, an indicator of future sales, fell the farthest in the Northeast, dropping 14.6 percent in November from the same time last year. Pending home sales in the South and Midwest also fell, but pending sales in the West were 20 percent higher than last November, a sign that a blitz of foreclosure buying has made ripples in the broader market.

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