There was a huge drop in the U.S. NAPM non-Manufacturing Index, in October, but this is precisely what analysts were expecting.

Non-manufacturing NAPM dropped to a record low 40.6 reading in October, down from 50.2 in September. “This supports the big decline in services jobs seen in the payroll figures Friday and it also helps confirm that the drop in the manufacturing economy has spread to services, satisfying the recession requirement that the drop in business has to be widespread,” says BMO Nesbitt Burns.

The survey gives credence to the theory that Sept. 11 acted as an important catalyst which sped up the recession process, says BMO NB. “Members report severe slowing of October business activity resulting from the aftermath of the Sept. 11 terrorist events which aggravated already weak business conditions. The events of Sept. 11, by increasing the level of uncertainty in the economy, also had the apparent effect of solidifying earlier tentative decisions to reduce business commitments and employment.”

“Markets are thoroughly aware that the economy fell like a rock in October. So, this new data release did not materially affect expectations one way or the other,” says BMO NB.