The Institute of Supply Management said today that the service sector index for October had dropped even further than anticipated ? from 50.2 in September to 44.4, the worst reading since September 1982 (the end of a year-and-a-half long recession). Economists surveyed by Reuters had expected the number to be around 47.5. Any number below 50 signals a contraction of the sector. 82% of those asked said they had reduced spending, hiring or both in the wake of the economic crisis. Business fell particularly for hotels, construction firms, and retailers. New orders, deliveries, backlogs, and inventories all took a hit. Ian Sheperdson, chief economist at High Frequency Economics called the downturn, ?horrible, but only to be expected.?
See "Slower spending hurt service sector in October", The New York Times, November 4, 2008