Service sector weakens in November
Purchasing managers say sector contracts for second straight month as key components of report hit record lows.
NEW YORK (CNNMoney.com) -- An index tracking the nation's service sector tumbled in November, a purchasing managers' group said Wednesday.
The Institute for Supply Management's (ISM) non-manufacturing index fell to 37.3 from 44.4 in October. Economists were expecting a reading of 42, according to a consensus compiled by Briefing.com.
A reading of 50 is the "boom-bust" line in the index, with readings above 50 indicating growth, and below 50 representing decline. The index had stood around the 50 mark for most of the 11 months since it was revamped earlier this year, but has fallen for the past two months.
The report suggests that the service sector is even more susceptible to the economic downturn than initially thought, with particular weakness in employment, according to a statement from Sam Bullard, an economist at Wachovia.
It also shows that respondents are concerned about the "time line for the economy to stabilize and the impact it is having on discretionary spending and employment," according to a statement from Anthony Nieves, chairman of the Institute for Supply Management Non-Manufacturing Business Survey Committee.
Three of the four components to the overall index - business activity/production, employment and new orders - fell to their lowest levels since they were first reported in 1997.
Business activity/production fell the most, sliding to 33 in November from 44.2 in October.
The employment index posted the second greatest drop, contracting to 31.3 from 41.5.
The employment index has been weighed down by an economy shedding jobs at record rates. In November, private-sector employers cut a quarter-million jobs, according to a report by payroll processor ADP.
The new orders index continued its second month of contraction, decreasing to 35.4 from 44 last month.
Prices, which had been on the rise for nearly 5-1/2 years, reversed course and fell below the benchmark of 50. The prices index fell to 36.6 from 53.4 in October, a 16.8 decrease, its largest ever one-month decline.
The supplier deliveries index increased to 49.5 from 48 the prior month.
The ISM non-manufacturing index was reformulated in January, taking into account the business activity, new orders, employment and supplier deliveries components. 
