Service sector surprisingly weak in January (Greg Robb)

Created by : Airlight View profile

McJob

The non-manufacturing side of the U.S. economy, which had been the firmest pillar of the economic expansion, buckled in January, according to data reported Tuesday by the Institute for Supply Management.

Economists called it the clearest signal to date of a recession.

The ISM non-manufacturing index fell to a reading of 41.9% last month, down from 54.4% in December. It was the lowest level since October 2001. Read full report.

It was also the largest one-month drop in the index's history, coming in well below the 53.0% reading that had been expected by economists.

Moreover, it marked the first reading below the 50% mark since March 2003, and the second-lowest reading ever to boot. Readings below 50% indicate most firms are contracting.

Only three of 18 services industries tracked by the ISM were growing in January. Of these, just one -- transportation -- was hiring.

On Wall Street, stocks dropped sharply, undermined in large measure by the ISM index. See Market Snapshot.

Conversely, government bonds rallied, bid higher by investors seeking a safe haven in which to put their money. Read Bond Report.