Service Sector Slump Raises Recession Fears

As economists geared up to analyze the Federal Reserve's interest rate decision on, their attention was grabbed by an unusually worrying indicator on the health of U.S. exports. The Institute for Supply Management's index of new export orders in the services sector dropped by 4.5 percentage points in July, slipping to a five-month low of 47.5 per cent. A similar ISM index for manufacturers also fell by 4.5 percentage points, to a reading of 54 percent — the lowest since last December. Exports have been booming over the past 18 months, helping to prop up the U.S. economy as it has skidded towards recession. However, there are fears that with world growth rates beginning to slow, appetite for U.S. products and services will also wane.