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 today 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.

President Barack Obama kicked off a White House jobs forum Thursday by saying he is “open to every demonstrably good idea” to reverse the rising tide of job losses. But with limited government resources, the private sector ultimately will have to lead.

“We have to be surgical and we’re going to have to be creative,” Obama said, appealing to his audience of academics, business and union leaders, and local officials to help him find “the biggest bang for the buck.”

Meanwhile, 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.

The ISM measure tracks more than 80 percent of the country’s economic activity, including such diverse industries as health care, retail, financial services and transportation.

The trade group said employment shrank for the 22nd time in the last 23 months, albeit at a slightly slower pace. Business activity shrank again after growing for the past three months and backlogs contracted. But new orders, a sign of future growth, continued expanding and prices rose.

The ISM’s service-sector gauge is closely watched because the sector includes more than 80 percent of nonfarm U.S. jobs.