U.S Services contract too
The latest bit out from the U.S. is that the services sector has unexpectedly contracted.
From Bloomberg News:
U.S. service industries unexpectedly contracted in June as a gauge of prices soared to a record and employment reached an all-time low.
The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, decreased to 48.2, the lowest level since January, from 51.7 in May. A reading of 50 is the dividing line between growth and contraction.
Rising energy costs and the prospect of slower consumer demand are making companies less optimistic and pushing them to trim their own spending on technology and payrolls. Earlier today, the government reported that the U.S. lost jobs in June for a sixth straight month.
“I don’t think there’s any way that you cannot have slowing in the service sector,” John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina, said before the report. “The housing correction did spread to the rest of the economy.”
The U.S. and the U.K. both have economies that are high on debt, low on credit availability where the services and manufacturing sectors are in the doldrums and unemployment is rising. Nearly all of these factors speak to recession.
U.S. Service Industries Contract, Prices Reach Record, Bloomberg News, 3 Jul 2008