Business activity in the service sector sank in January to its lowest level since October 2001, its first contraction since March 2003, according to the Institute for Supply Management's non-manufacturing business activity index released today. The index fell to 41.9 in January from 54.4 in December. Index readings above 50 indicate growth.

The employment portion of the index also shrunk to 43.9 in January from 51.8 in December.

"The overall indication in January is that non-manufacturing has come to the end of a long-term period of growth and has contracted for the month of January," said Anthony Nieves, chair of the institute's non-manufacturing business survey committee.

The report is based on a survey of purchasing and supply executives across the country.