Contraction

AP: U.S. Service Sector Contracts in January

The Institute for Supply Management reported that its index of service sector business activity declined to 44.6 in January from a revised reading of 54.4 in December. Economists surveyed by Thomson Financial/IFR had expected a slight slowdown but had still had expected growth, with a median estimate for the index of 53.

It was the first time the service sector reading has contracted since March 2003. A reading above 50 indicates expansion, while below 50 indicates contraction.

What is the service sector.

The service sector consists of the "soft" parts of the economy such as insurance, government, tourism, banking, retail, education, and social services. In soft-sector employment, people use time to deploy knowledge assets, collaboration assets, and process-engagement to create productivity (effectiveness), performance improvement potential (potential) and sustainability. The tertiary sector is the most common workplace. source

Translation: unemployment increased and spending decreased