This is very bad news. Since services constitute such a large part of the economy, this will almost certainly mean that aggregate output and employment will continue to fall at accelerating rates, and that we are not anywhere close to the depths of the crisis. Add to this similar declines in services registered in the likewise super-service weighted UK and the Eurozone, and the outlook for global revival becomes dire, indeed. The employment-related data mentioned here virtually ensure that Friday’s employment report will be the worst yet since the crisis began. From Reuters:
Private jobs and services slump show recession toll
Wed Dec 3, 2008 10:58am EST
By Burton Frierson
NEW YORK (Reuters) Private employers slashed an unexpectedly high 250,000 jobs in November, the most in seven years, while the service sector that powers most of the economy posted its worst slump on record.
The reports on Wednesday were the latest signs that the job market is nowhere near a bottom as the U.S. recession enters its second year and the entire economy was still in a state of trauma after the worst financial crisis in a generation.
“The severe damage to the service industry is another indication of the extraordinary force of this recession,” said Pierre Ellis, senior economist at Decision Economics in New York.
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