U.S. non-manufacturing sector’s growth decelerates more than expected in June - ISM

U.S. non-manufacturing sector’s growth decelerates more than expected in June - ISM

The Institute for Supply Management (ISM) reported on Wednesday its non-manufacturing index (NMI) came in at 55.1 in June, which was 1.8 percentage points lower than the May reading of 56.9 percent. The June reading pointed to the slowest expansion in the services sector since July 2017.

Economists forecast the index to fall to 55.9 last month. A reading above 50 signals expansion, while a reading below 50 indicates contraction.

Of the 18 manufacturing industries, 16 reported growth last month, the ISM said.

According to the report, the ISM’s non-manufacturing business activity measure fell to 58.2 percent, 3.0 percentage points lower than the May reading of 61.2 percent. That reflected growth for the 119th consecutive month, at a slower rate in June. The new orders gauge decreased to 55.8 percent, 2.8 percentage points lower than the reading of 58.6 percent in May. The employment indicator declined 3.1 percentage points in June to 55 percent from the May reading of 58.1 percent. Meanwhile, the Prices Index rose 3.5 percentage points from the May reading of 55.4 percent to 58.9 percent, indicating that prices increased in June for the 25th consecutive month.

Commenting on the data, the Chair of the ISM Non-Manufacturing Business Survey Committee, Anthony Nieves, noted, "The past relationship between the NMI and the overall economy indicates that the NMI for June (55.1 percent) corresponds to a 2.3-percent increase in real gross domestic product (GDP) on an annualized basis.”