by Calculated Risk on 11/05/2008 10:07:00 AM

From the Institute for Supply Management (ISM): October 2008 Non-Manufacturing ISM Report On Business®

The report shows the service sector contracted sharply in October.

"The NMI (Non-Manufacturing Index) registered 44.4 percent in October, 5.8 percentage points lower than the 50.2 percent registered in September, indicating contraction in the non-manufacturing sector after two consecutive months of growth."
Anthony Nieves, chair of the Institute for Supply Management

There were a couple of interesting comments on discretionary spending:

"Uncertainty is having the usual effect on business. Our response is traditional — stop all discretionary spending."

"Business down significantly! Discretionary spending disappearing."

This is exactly how businesses (and consumers) react to uncertainty - halt all discretionary spending. This is usually a temporary reaction until the business can adjust to changes in economic conditions.