U.S. Services Sector Shows Growth in June

The U.S. services sector experienced accelerated growth in June, surpassing expectations and indicating resilience despite concerns about the economy. According to the Institute for Supply Management (ISM), the services activity index for June rose to 53.9 from 50.3 in May, surpassing economists’ forecast of 51.3.

Stable Business Conditions with Cautious Outlook

While business conditions were reported as stable by respondents, there remained a sense of caution regarding inflation and the future economic outlook, according to Anthony Nieves, Chair of the ISM Services Business Survey Committee.

Factors Driving Growth

The growth rate in the sector was driven by strength in employment, new orders, and overall business activity. Nieves further noted that increased capacity and improvements in logistics resulted in shorter delivery times.

Positive Indicators

In June, ISM’s business activity index rose to 59.2 from 51.5 in May, indicating increased business activity. Moreover, the new orders index also experienced its sixth consecutive month of growth, rising to 55.5 from 52.9 in May.

Employment on the Rise

Hiring within the service sector improved in June, with the employment index rising to 53.1 from 49.2 in May.

Broad-Based Expansion

Of the 18 industries evaluated by ISM, 15 expanded in June. These included real estate, rental and leasing, transportation and warehousing, construction, finance and insurance, retail trade, as well as health care and social assistance.

Declining Industries

Three industries experienced declines last month: agriculture, forestry, fishing and hunting; mining; and information.