Activity in the U.S. service sector grew for the fifty-third consecutive month in June, according to a report released by the Institute for Supply Management on Thursday, although the pace of growth slowed slightly compared to the previous month.
The ISM said its non-manufacturing index edged down to 56.0 in June from 56.3 in May, although a reading above 50 indicates continued growth in the service sector. Economists had been expecting the index to come in unchanged.
Peter Boockvar, managing director at the Lindsey Group, said, "While down slightly m/o/m and below the estimate, the overall level is still at a good pace of growth, continuing the rebound after Q1."
The report showed a notable decrease by the business activity index, which tumbled to 57.5 in June from 62.1 in May.
On the other hand, the new orders index crept up to 61.2 in June from 60.5 in May, reaching its highest level since January of 2011.
The employment index also rose to 54.4 in June from 52.4 in May, indicating the fourth consecutive month of job growth in the service sector.
Meanwhile, the report also showed that the prices index dipped to 61.2 in June from 61.4 in May, suggesting a slight slowdown in the pace of price growth.
The ISM released a separate report on Tuesday showing that the U.S. manufacturing sector unexpectedly grew at a slightly slower rate in the month of June.
The purchasing managers index edged down to 55.3 in June from 55.4 in May, while economists had expected the index to inch up to 55.8.
Paul Dales, Senior U.S. Economist at Capital Economics, said, "A weighted average of the headline indices of the two ISM activity surveys is still pointing to annualized GDP growth of close to 3% in the second quarter."
"That supports the message from pretty much all the incoming monthly data," he added. "In any case, the strength of the labor market will have a greater bearing on the Fed's thinking than the rate of GDP growth."
