U.S. ISM Non-Manufacturing Index Slips

By Dow Jones Business News, 

Activity in the U.S. non-manufacturing sector pulled back slightly last month, according to data released Thursday by the Institute for Supply Management.

The ISM's non-manufacturing purchasing managers' index edged down to 56.0 in June from 56.3 in May, which was the highest reading since August 2013.

The outcome matches expectations among forecasters surveyed by The Wall Street Journal.

"There was a lag on some business activity, but it's still very respectable," said Anthony Nieves, chair of the ISM Non-Manufacturing Business Survey Committee, pointing to the rise in new orders that bodes well for future activity. " Looking back historically, we always see a bit of waning in the warmer months."

Subindexes to the ISM's service gauge were mixed in June after posting big advances in April and May.

The ISM business activity/production index decreased to 57.5 last month, after jumping to 62.1 in May, which was the highest level since February 2011.

The new orders index held up, rising to 61.2 from 60.5 in May, while the employment index increased to 54.4 from 52.4.

The rise in employment "definitely has to do with capacity," Mr. Nieves said. Nonmanufacturing firms "have had to deal with doing more with less for a long time. [Now with new orders], they need to meet the demand."

The solid nonmanufacturing employment index aligns with recent readings on the broader U.S. labor market. Thursday morning, the Bureau of Labor Statistics reported the U.S. economy added 288,000 nonfarm payrolls in June, far surpassing expectations.

The non-manufacturing ISM inventory index declined to 53.5 from 55.5 in May, while the prices index edged lower to 61.2 from 61.4.

The ISM non-manufacturing report is comprised mainly of comments from service-sector companies that make up the bulk of the U.S. economy, but it also includes construction and public administration.

Write to Cynthia Lin at cynthial.lin@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

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This article appears in: US Markets , Economy

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