US service-sector activity picked up in June, a sign the economy is slowly picking up steam after a lackluster start to the year.
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The June US Non-Manufacturing/Services Index registered 56.5 in June, 3.6 points higher than the May level of 52.9 – the largest single-month jump since 2008. Fifteen non-manufacturing industries reported growth in June, while three reported contraction. “Respondents’ comments are mostly positive about business conditions and the economy”. Among the manufacturing industries reporting growth are Petroleum & Coal Products, Fabricated Metal Products, Primary Metals and Machinery. Respondents reported seeing “greater demand for services by customers” along with increased month-to-month and year-over-year sales.
New orders gained 1.3 points and production 2.1 percentage points for readings of 57.0 and 54.7, respectively. After a contraction in 2015, the manufacturing economy is on a win streak with four consecutive months of growth.
A respondent from the transportation industry noted that while “business is still strong, it is slowing slightly”.
On the inflation front, the prices index edged down to 55.5 in June from 55.6 in May, although the reading above 50 suggests prices increased for the third consecutive month.
Readings above 50 in the ISM non-manufacturing index, which includes industries that account for nearly 90 percent of the economy, signal growth.
Prices are increasing but at a slower rate, with the Prices Index dropping 3% from 63.5% in May to 60.5% in June.
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While the U.K.’s decision to leave the European Union remains a risk, a separate ISM poll showed most purchasing executives in both the services and manufacturing sectors expect little impact on their operations and staffing levels this year from the vote. “We saw that polling our manufacturing and non-manufacturing Business Survey Committees might produce important information to the markets with regard to how procurement executives view their business prospects for the remainder of the year”.
