WASHINGTON (MarketWatch) — The service sectors of the U.S. economy contracted again during June but at a slower pace, according to a survey of companies released Monday by the Institute for Supply Management.
The ISM nonmanufacturing index rose to 47.0% from 44.0% in May. This is the highest level since last September.
Readings below 50% in the diffusion index indicate more firms are contracting than expanding. The index has been below 50% for the past nine months, but it has been improving in fits and starts since hitting a record low in November.
In June, six industries reported growth, while eleven reported contraction.
All in all, the June data fit into the scenario of a “less-bad economy.”
Anthony Nieves, chairman of the Tempe, Ariz.-based ISM’s services survey, called the results “encouraging” and said that there were renewed signs of stabilization in the sector.
“We’re starting to see this leveling off a bit,” Nieves said. “Everything is starting to contract slower — a steady slowing.”
Nieves said the index should rise above the 50% threshold by the fall.
Economists explained that the services index is typically valued because it gives a hint of the unemployment report. But this month, monthy U.S. data on nonfarm payrolls were released first. See June employment report.
Economists surveyed by MarketWatch had expected the ISM index for June to increase to a reading of 46.0%.
The new-orders index rose to 48.6% from 44.4% in May, while the employment index also increased, climbing to 43.4% for June from 39.0% the prior month. The prices-paid index rose to 53.7% in June from 46.9% in the previous month.
The June ISM services report had little impact on financial markets.
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