Business and banks, hotels and airlines in the US shrank for the first time in more than a year last month, according to figures from the Institute for Supply Management. It said its overall index of non-manufacturing activity fell to 47.9 in March from 53.9 in February, where a reading below 50 indicates contraction. The decline in the services activity index was much worse than expected, with analysts expecting a decrease to around 52.0. "New orders were below their February level and the backlog of orders index indicated that backlogs were less in March than in February," said Ralph Kauffman, chair of the ISM non-manufacturing business survey committee.
He also said he believes that a "substantial amount" of the drop can be attributed to uncertainty related to the war in Iraq. The employment index fell to 47.9 from 49.0 in the previous month, indicating that companies cut jobs at a faster pace than in the previous month. Weekly jobless figures published earlier today revealed that new jobless claims in the week to 29 March jumped 38,000 to 445,000, the highest level in almost a year. //www.fxcentre.com