The U.S. non-manufacturing sector grew in June for a sixth straight month but the rate of growth slowed more than expected.
The Institute for Supply Management said in a report released Tuesday that the service sector activity fell to 53.8 from 55.4 in May (a reading above 50 indicates that the sector is generally expanding), its slowest pace of growth since February, indicating the economy was beginning to moderate entering the second half.
Economists said that although the report was consistent with a slow down, business activity still remains firmly entrenched in its expansion cycle.
ISM: “The NMI (Non-Manufacturing Index) registered 53.8 percent in June, 1.6 percentage points lower than the 55.4 percent registered in May, [showing] continued growth in the non-manufacturing sector, but at a slightly slower rate.
The Non-Manufacturing Business Activity Index decreased 3 percentage points to 58.1 percent, reflecting growth for the seventh consecutive month. The New Orders Index decreased 2.7 percentage points to 54.4 percent, and the Employment Index decreased 0.7 percentage point to 49.7 percent, reflecting contraction after one month of growth. The Prices Index decreased 6.8 percentage points to 53.8 percent in June, indicating that prices are still increasing but at a slower rate than in May. According to the NMI, 15 non-manufacturing industries reported growth in June. Respondents’ comments are mostly positive about business conditions; however, there is concern about the effect of employment on the economic recovery.”