New York, July 6—The service sector's expansion cooled off somewhat in June, a closely watched private survey found, though hiring and orders for new goods heated up compared to May's pace.
The Institute for Supply Management's non-manufacturing index registered a 59.9 reading in June, versus 65.2 in May. That was well below the 63.0 reading expected by economists. Any reading above 50 indicates expansion in the service sector, which accounts for the majority of U.S. economic activity.
The ISM noted that even as the overall increase for June came at a slower pace compared to May, it was nonetheless the 15th straight month of growth for the sector. The ISM service-sector data follow the group's report last week on manufacturing, which also showed a moderation in overall activity for June.
"This month, 13 sectors reported increased business activity" while "one reported decreased activity, and three reported unchanged activity compared to May," the ISM said in a news release. June's best performers were in the transportation, utilities and agriculture sectors.
Economists said that today's report is largely consistent with robust annual economic growth.
Within the report, inflation crept slightly higher in June, rising to 74.6 from 74.4 in May. Though businesses polled appear to be more optimistic about the economic outlook and see general business conditions improving over the coming months, many remain concerned about inflationary pressures. Most continued to note higher prices for energy and other commodities and to complain that many raw materials are in short supply.
The report's employment index suggested that hiring by services firms continues to improve, registering the ninth-straight month of gains and hitting the highest mark since the report's inception in 1997. The June reading rose to 57.4 from 56.3 in May. Also, new orders ticked upward to 62.4 in June from 61.3 in the prior month. Order backlogs also remained robust, though they eased slightly to 55.5 from 56.5 in May.
