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March 5, 2008 4:10 PM, EST

ISM Services Index Improves, but Still Shows Contraction

The economy’s service sector contracted in February but improved from January, the Institute for Supply Management said Wednesday.

ISM’s services index improved to a reading of 49.3, from a record low of 44.6 in January, the group said.

Figures of more than 50 indicate expansion; below that level shows contraction.

The services index measures non-manufacturing components of the economy. Analysts had expected the index to rise to 47.3, Bloomberg reported.

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