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US services activity expanded in June for sixth straight month

WASHINGTON (AFP) – United States (US) services sector activity picked up pace in June to record six consecutive months of expansion due to increased business activity, employment and new orders, according to survey data released on Thursday.

The strong services sector suggests the US Federal Reserve’s (Fed) fight against inflation has some road left to run.

The Fed recently paused its aggressive campaign of interest rate hikes after 10 consecutive increases, despite inflation lingering above its long-term target of two per cent.

The Institute for Supply Management (ISM) services index, measuring the health of this key sector of the economy, increased to 53.9 per cent last month, up from 50.3 per cent in May.

A number above 50 means the sector is still expanding.


“Fifteen industries reported growth in June,” ISM survey chair Anthony Nieves said in a statement, adding that the ISM services indicator data pointed to an expanding sector for “all but three of the previous 160 months”.

He said the uptick in June was “due mostly to the increase in business activity, new orders and employment”.

In other positive news, Nieves said the data showed delivery times had also decreased, and business conditions remain stable. But he added that business “are cautious relative to inflation and the future economic outlook”.

While services remain buoyant, the situation is starkly different for manufacturing in the US, which contracted for an eighth straight month in June on the back of weak demand and slowing production.

The data from the ISM published earlier this week indicates the contraction in the sector is deepening, at the same time as other sectors of the US economy show signs of unexpected buoyancy.