While respondents' comments were mixed, the results of the Institute for Supply Management's survey of activity in the service sector in the month of July showed continued growth at a slighter faster rate.
The ISM said its non-manufacturing index crept up to 52.6 in July from 52.1 in June, with a reading above 50 indicating growth in the service sector. The increase surprised economists, who had expected the index to edge down to a reading of 52.0.
Anthony Nieves, chair of the ISM Non-Manufacturing Business Survey Committee, said, "According to the NMI, 11 non-manufacturing industries reported growth in July. Respondents' comments are mixed and vary by industry and company."
The report, released Friday, showed that the non-manufacturing business activity index jumped to 57.2 in July from 51.7 in June, indicating an acceleration in the pace of growth.
The new orders index also climbed to 54.3 in July from 53.3 in June, while the inventories index rose to 54.5 from 53.0 in the previous month.
On the other hand, the report showed that the employment index fell to 49.3 in July from in 52.3 in June, indicating the first month of contraction in employment in the service sector since December 2011.
The employment index is in stark contrast to data released by the Labor Department earlier in the day showing that the service-providing sector added 148,000 jobs in July
With regard to inflation, the ISM said its prices index surged up to 54.9 in July from 48.9 in June, pointing to a turnaround for prices in the service sector.
Peter Boockvar, managing director at Miller Tabak, said, "In the context of a slowing, mediocre economy, a number that reflects about 80% of U.S. economic activity such as this coming in slightly better than expected and staying above 50 (in contrast to ISM mfr'g) is a relief to the markets today."
Wednesday morning, the ISM released a separate report showing that its index of activity in the manufacturing sector rose by less than expected and continued to point to a contraction in the sector.
The ISM said its purchasing managers index inched up to 49.8 in July from 49.7 in June, although a reading below 50 indicates a contraction in manufacturing activity. Economists had been expecting the index to climb to a reading of 50.2.
With the index stuck below 50, it pointed to just the second month of contraction in manufacturing activity since July of 2009.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.