By Xavier Fontdegloria
Activity among U.S. services providers kept growth momentum in June, in a sign that the pandemic reopening boom still outweighs concerns over inflation and increasing interest rates.
The Institute for Supply Management said Wednesday that its index of services activity fell to 55.3 in June from 55.9 in May, the lowest level since May 2020. However, the reading came in above the 54.0 consensus forecast that economists expected in a poll by The Wall Street Journal.
The indicator, which is based on a survey to services providers across the U.S., suggests that activity in the sector expanded over the month as it is above the 50.0 point threshold that indicates growth.
The drop in the index was driven by a decline in the employment index, which fell into contraction territory; and by a decrease in the new orders index, which signaled that demand continued to slow, said Anthony Nieves, chair of the ISM Services Business Survey Committee.
The inventories index also fell to contraction, signaling firms’ difficulties to replenish inventories.
However, the business activity index increased to 56.1 from 54.5, the data showed.
Other indicators suggested little improvement in supply-chain pressures. The supplier deliveries index increased slightly to 61.9 from 61.3, and the backlog of orders index rose markedly to 60.5 from 52.0.
Inflation pressures remained high, with the prices index falling slightly to 80.1 from 82.1, the report said.
“Logistical challenges, a restricted labor pool, material shortages, inflation, the coronavirus pandemic and the war in Ukraine continue to negatively impact the services sector,” Mr. Nieves said.
Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com
(END) Dow Jones Newswires
July 06, 2022 10:36 ET (14:36 GMT)
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