The US ISM non-manufacturing index fell to a record low of 37.3 in November from 44.4, signaling the sharpest contraction in the services sector since recordkeeping began in 1997. Nearly every other component hit their worst levels ever as well, including business activity, employment, prices paid, new orders, and new export orders. This is bearish for the US economy in many ways, as it suggests Q4 GDP could contract following the 0.5 percent drop in Q3, and also indicates that the release of Friday’s US non-farm payrolls and unemployment rate could be deeply disappointing.
Nevertheless, there has been little reaction in the markets to this release as the National Bureau of Economic Research (NBER) has already said that the US fell into recession in December 2007.