2023.07.0614:42:00UTC+00U.S. Services Index Rebounds More Than Expected In June

After reporting only modest U.S. service sector growth in the previous month, the Institute for Supply Management released a report on Thursday showing the pace of growth in the sector accelerated by much more than expected in June.

The ISM said its services PMI climbed to 53.9 in June from 50.3 in May, with a reading above 50 indicating growth in the sector. Economists had expected the index to inch up to 51.0.

The bigger than expected rebound by the headline index was partly due to a notable acceleration in the pace of growth in business activity, as the business activity index jumped to 59.2 in June from 51.5 in May.

The new orders index also rose to 55.5 in June from 52.9 in May, while the employment index increased to 53.1 from 49.2, indicating job growth in the service sector after a contraction in the previous month.

On the inflation front, the report said the prices index fell to 54.1 in June from 56.2 in May, suggesting a slowdown in the pace of price growth.

"The majority of respondents indicate that business conditions remain stable; however, they are cautious relative to inflation and the future economic outlook," said Anthony Nieves, Chair of the ISM Services Business Survey Committee.

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

The ISM said its manufacturing PMI edged down to 46.0 in June from 46.9 in May, with a reading below 50 indicating contraction. The dip surprised economists, who had expected the index to inch up to 47.2.