There was a double setback for hopes of a US recovery today, as reports showed a bigger fall in activity in the US service sector and bigger than expected job losses in the private sector.
The Institute for Supply Management's services index showed that the sector shrank in July at a faster pace than in June. It fell to 46.4 last month, below economists' forecasts, from 47 in June. Any figure below 50 means activity fell.
The index had climbed toward the 50 point for the past three months. The service sector represents about 80% of US economic activity, including businesses such as banks, airlines, hotels and restaurants.
Meanwhile, a survey by personnel firm ADP showed that the US private sector shed 371,000 jobs in July, sharply lower than in June but more than expected.
The number of private non-farm jobs that vanished last month exceeded the 350,000 forecast by most analysts.
The ADP National Employment Report said a revised 463,000 jobs were shed in June, cutting 10,000 jobs from its initial estimate.
'Despite recent indications that overall economic activity is stabilising, employment, which usually trails overall economic activity, is likely to decline for at least several more months, albeit at a diminishing rate,' ADP said.
The report provides a snapshot on the ailing US labour market in the world's biggest economy, reeling from the worst recession since the Great Depression, ahead of the government's official monthly data, which covers the public and private sectors.
The Labor Department is to publish July jobs data on Friday. Most analysts expect the unemployment rate to have climbed to 9.6% from 9.5% in June, a 26-year high, amid a painful recession that began in December 2007.
