US Services Sector Falls into Contraction for First Time in a Decade

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WASHINGTON (AP) — The U.S. service sector plunged into contraction territory for the first time in a decade last month as the pandemic forced shutdowns and layoffs nationwide.

The Institute for Supply Management said Tuesday that its service-sector index fell to 41.8 in April, compared with a March reading of 52.5.

Any reading below 50 signals that the service sector, where the majority of Americans work, is in a contraction. It was the first time the services index has been in contraction since December 2009 and it was the lowest reading since March of that year with the nation mired in the Great Recession.

In April, all major categories fell sharply with the business activity index dropping to 26, the lowest reading on record, while the new orders index fell to 32.9 and the employment index dropped to 30. Prices moved up.

Two sectors reported expansion in the quarter: public administration and finance.

“Due to increased loans from [the federal] stimulus package, [we are] seeing an increase in new business,” a respondent in the financial sector said.

 

–The Associated Press contributed to this report.

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