January 6, 2009 10:05 AM, EST

ISM Services Index Improves but Shows Contraction

The U.S. economy’s service sector improved, but showed contraction for a third straight month in December, the Institute for Supply Management said Tuesday.

ISM’s monthly services index rose to a reading of 40.6, from 37.3 in November, the group said in its monthly report.

Figures of more than 50 indicate expansion, while below that shows contraction. Economists had forecast a decline to reading of 36.5, Bloomberg reported.

The index measures non-manufacturing components of the economy, and the services sector, which includes transportation, retail sales and financial services, accounts for nearly two-thirds of the U.S. gross domestic product.