US Economy
US service sector expanded for a 19th consecutive month in June but at slower pace
By Finfacts Team
Jul 6, 2011 - 4:10 PM

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The US service sector, which accounts for almost 90% of the country's work force, expanded for a 19th consecutive month in June. However, growth slowed from May, in a further sign that the economy recovery is spluttering.

Anthony Nieves, chair of the Institute for Supply Management Non-Manufacturing Business Survey Committee said: "The NMI (Non-Manufacturing Index) registered 53.3% in June, 1.3 percentage points lower than the 54.6% registered in May, and indicating continued growth at a slower rate in the non-manufacturing sector.

The Non-Manufacturing Business Activity Index decreased 0.2 percentage point to 53.4%, reflecting growth for the 23rd consecutive month, but at a slightly slower rate than in May. The New Orders Index decreased by 3.2 percentage points to 53.6%. The Employment Index increased 0.1 percentage point to 54.1%, indicating growth in employment for the 10th consecutive month and at a slightly faster rate than in May.

The Prices Index decreased 8.7 percentage points to 60.9%, indicating that prices increased at a slower rate in June when compared to May. According to the NMI, 15 non-manufacturing industries reported growth in June. Respondents' comments are mixed about the business climate and vary by industry and company. The most prominent concern remains about the volatility of prices."

On Monday, the ISM reported that the manufacturing sector expanded in June at a faster pace than the previous month, as supply disruptions stemming from Japan's earthquake faded.

The 15 non-manufacturing industries reporting growth in June based on the NMI composite index - - listed in order - - are: Real Estate, Rental & Leasing; Transportation & Warehousing; Wholesale Trade; Professional, Scientific & Technical Services; Mining; Construction; Other Services; Educational Services; Arts, Entertainment & Recreation; Public Administration; Management of Companies & Support Services; Accommodation & Food Services; Information; Utilities; and Retail Trade. The two industries reporting contraction in June are: Finance & Insurance; and Health Care & Social Assistance.

ISM's Non-Manufacturing New Orders Index grew in June for the 23rd consecutive month. The index registered 53.6%, a decrease of 3.2 percentage points from the 56.8% reported in May. Comments from respondents include: "Higher level of spending due to more budgets approved for this fiscal year" and "Increase in national accounts business."

Employment activity in the non-manufacturing sector grew in June, as ISM's Non-Manufacturing Employment Index registered 54.1%. This reflects an increase of 0.1 percentage point when compared to the 54% registered in May. Fourteen industries reported increased employment, three industries reported decreased employment, and one industry reported unchanged employment compared to May. Comments from respondents include: "Continuing to fill backlog of positions" and "Hiring to get back to required staffing levels."

ISM Non-Manufacturing Index:

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