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Feb. 5 (Bloomberg) -- U.S. service industries unexpectedly contracted in January at the fastest pace since the 2001 recession as the housing slump deepened and consumer spending cooled.
``This is a stunning fall,'' said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. ``If accurate, it's dire news on the economy.''
For all of last year, total orders -- durable and nondurable goods -- placed with U.S. factories went up by just 1.4 percent. It was the worst performance since 2002, when the economy was struggling to recover from the 2001 recession. In 2006, factory orders rose by 5.1 percent.
Manufacturers have been hard hit by the housing bust and a struggling automotive sector. They also continue to cope with fierce competition from overseas producers.
Against that backdrop, factories eliminated 28,000 jobs in January and have cut 269,000 jobs over the past 12 months, the government reported last week.
Home equity lines of credit are loans that use a home as collateral and allow the borrower to withdraw money up to a maximum limit.
Those lines are drying up as Countrywide Financial announced Thursday that it has cut off 122,000 borrowers from pulling any more equity out of their homes. Wells Fargo, Washington Mutual and JPMorgan Chase released statements Friday that they have also started halting equity lines because of tumbling home values, but declined to provide any numbers.