Service sector activity, retail sales disappoint

NEW YORK (AP) — Further evidence that the economic recovery will be a slow and bumpy one emerged Thursday with reports that service sector activity and retail sales unexpectedly shrank in November as consumers held back on purchases.

The government did report one positive sign: New jobless claims dropped for a fifth straight week. But productivity gains in the third quarter showed that employers are managing to squeeze more work out of fewer workers. That's an ominous sign for the nearly 16 million Americans looking for jobs - and for many others who fear losing theirs.

The government is expected to report Friday that employers shed 130,000 jobs in November and that the unemployment rate will remain at 10.2 percent. Companies have been laying off fewer workers. But they have yet to ramp up hiring, and the jobless rate is expected to expected to keep climbing into next year.

The Institute for Supply Management's service sector index dropped to 48.7 from 50.6 in October. Analysts polled by Thomson Reuters had expected a level of 51.1. Any reading below 50 signals contraction. The service sector had begun growing in September for the first time in 13 months.