Financial News: U.S. Service Sector Activity Unexpectedly Contracts In Jun

U.S. Service Sector Activity Unexpectedly Contracts In June

07/03/2024 - 10:57:00 (RTTNews)

(RTTNews) - A report released by the Institute for Supply Management on Wednesday showed an unexpected contraction by U.S. service sector activity in the month of June.

The ISM said its services PMI slid to 48.8 in June from 53.8 in May, with a reading below 50 indicating contraction. Economists had expected the index to edge down to 52.5.

"The decrease in the composite index in June is a result of notably lower business activity, a contraction in new orders for the second time since May 2020 and continued contraction in employment," said Steve Miller, Chair of the ISM Services Business Survey Committee.

He added, "Survey respondents report that in general, business is flat or lower, and although inflation is easing, some commodities have significantly higher costs."

The report said the business activity index plunged to 49.6 in June from 61.2 in May, while the new orders index tumbled to 47.3 in June from 54.1 in May and the employment index fell to 46.1 in June from 47.1 in May.

On the inflation front, the prices index dipped to 56.3 in June from 58.1 in June, indicating a modest slowdown in the pace of price growth.

The ISM released a separate report on Monday showing manufacturing activity in the U.S. unexpectedly contracted at a slightly faster rate in the month of June.

The ISM said its manufacturing PMI edged down to 48.5 in June from 48.7 in May. Economists had expected the index to inch up to 49.1.

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