U.S. Service Sector Growth Slows From Record Pace In June

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After reporting record U.S. service sector growth in the previous month, the Institute for Supply Management released a report on Tuesday showing the pace of growth in the sector slowed more than expected in the month of June.

The ISM said its services PMI slid to 60.1 in June from 64.0 in May, although a reading above 50 still indicates growth in the sector. Economists had expected the index to edge down to 63.5.

"The rate of expansion in the services sector remains strong, despite the slight pullback in the rate of growth from the previous month's all-time high," said Anthony Nieves, Chair of the ISM Services Business Survey Committee.

He added, "Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions."

The bigger than expected decrease by the headline index came as the business activity index slumped to 60.4 in June from 66.3 in May and the new orders index fell to 62.1 from 63.9.

The employment index also tumbled to 49.3 in June from 55.3 in May, indicating a modest contraction after five consecutive months of growth.

The report showed the prices index also dropped to 79.5 in June from 80.6 in May, pointing to a slight slowdown in the pace of price growth.

Last Thursday, the ISM released a separate report showing a modest slowdown in the pace of growth in U.S. manufacturing activity in the month of June.

The ISM said its manufacturing PMI slipped to 60.6 in June from 61.2 in May. Economists had expected the index to edge down to 61.0.

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