WASHINGTON — The service sector contracted in December for the third consecutive month but at a slower pace than expected.
The Institute for Supply Management said its service-sector index rose 3.3 percent to 40.6 percent. Any reading under 50 percent indicates contraction; any reading above signals growth. Most analysts had expected the index to decrease by 0.5 percent.
Retail was the only industry to report growth in December, despite a dismal holiday shopping season.
Separately, the Commerce Department reported Tuesday that factory orders dropped 4.6 percent in November, compared with a 6 percent decline in October. New orders for durable goods such as appliances and automobiles fell for the fourth month in a row. New orders for nondurable goods also fell sharply by 7.4 percent.
With business down and employers cutting benefits, hours and jobs, would-be homebuyers stayed on the sidelines in November. The National Association of Real tors said Tuesday its Pending Home Sales index fell 4 percent to its lowest level since the index began in 2001.
In recent weeks, mortgage rates have fallen to historic lows that have spurred a surge in mortgage applications, but that activity is not reflected in the November data.
However, Lawrence Yun, an NAR economist, said the slowdown in the economy could still hurt housing activity in December and said in a news release that “a real estate-focused stimulus plan is urgently needed.”
