Services industry showing signs of problems

Reports continue to show that the economic recovery is slowing, if it even ever really got started.  A key indicator, the services industry, has experienced a reduction in new orders just at a time it was supposed that service sector businesses would begin to gain impetus.

The recent report has ignited concerns about another recession and slowed a small gain in employment.  In August, service industry businesses hit a 16-month low.  September’s numbers gained over that record low, but not as substantially as expected.

This slow in the service industry completely nullifies assertions that gains in private sector employment were about to begin offsetting public sector losses.  The rate of increase from August to September could only be described as modest and the third quarter of 2010 reflects lows not experienced from the second quarter in 2009.

Mate this with a construction downturn and a fall off of export orders all through the same month, and you can hardly say you have recovery.  Economists say these are all indicators of suppressed growth over the next several months, certainly not increased growth.

New business growth is nearly stagnant and confidence is at a level consistent with high economic stress.  This lack of new business growth spurs reduced confidence, which indicates little business gains in the near future.

Economists and experts are also concerned that a lack of confidence, cancellation of government contracts, construction and export turndowns, and the service industry report add fuel to concerns that the recovery has lost momentum and negatively impacts the cycle of business inflow and employment.