The US services sector fell into contraction territory for the first time since the financial crisis in April, ending a 122-month expansion

• The US services sector plummeted into contraction territory in April for the first time since the financial crisis, the Institute for Supply Management announced Tuesday.
• The association's non-manufacturing index plunged to 41.8 from March's 52.5 reading, pushing the sharp decline into its second-straight month. Any reading below 50 indicates the sector is shrinking.
• April's drop ended a 122-month expansionary streak for the metric and was its lowest reading since March 2009.
• Surveyed businesses cited supply chain disruptions, a lack of operational capacity, and financial tightening for their weakened activity, Anthony Nieves, chair of ISM, said in the report.
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The US services sector slid into contraction territory in April as the coronavirus pandemic halted economic activity, the Institute for Supply Management announced Tuesday.

The institute's non-manufacturing index plunged to 41.8 from 52.5 in March, extending the sharp downtrend into its second month. The metric fell 4.8 percentage points last month as the coronavirus began slamming businesses throughout the country.

April's reading was the index's lowest since March 2009, when it plummeted to 40 in the wake of the financial crisis. Any reading below 50 indicates the sector is shrinking. The lower the reading, the sharper the contraction.

The index's April slump dragged it under the key threshold for the first time since December 2009 and ended a 122-month expansionary streak for the sector.

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The decline was primarily driven by supply disruptions for firms already struggling through the shutdown's early stages, Anthony Nieves, chair of ISM, said in the Tuesday report.

"Respondents are concerned about the continuing coronavirus impacts on the supply chain, operational capacity, human resources and finances, as well as the uncertain timelines for the resumption of business and a return to normality," he added.

Business activity slid to 26% from 48% in March. The latest reading is the metric's lowest since data collection began in 1997. New orders tanked 20 percentage points to 32.9% through the month.

ISM's employment index tumbled to 30% from 47% amid mass layoffs. Jobless claim data published Thursday showed another 3.8 million Americans filing for unemployment benefits in the week ended April 25. The metric's six-week total now sits above 30 million.

Public administration along with finance and insurance were the only two industries to report growth in April, according to ISM, while 16 industries including real estate, utilities, entertainment, and information all declined.

Though ISM's latest report highlights dire conditions for what makes up two-thirds of the US economy, gradual reopenings throughout the country are driving new hope for a swift recovery. About half of the states have begun to reboot their economies after weeks of near-complete shutdown. Health experts warn a premature reopening could drive a second wave of COVID-19 infections and push a full recovery well into 2021.

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