The U.S. services sector expanded at a faster pace in June as the non-manufacturing index rose to 59.1 from 58.6 in May, on a seasonally adjusted basis, the Institute for Supply Management reported Thursday.

An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.

Economists polled by IFR Markets had expected a 58.3 level.


The prices paid index slid to 60.7 from 64.3, the 28th consecutive month prices rose, the ISM said. The employment index fell to 53.6 from 54.1.

The business activity/production index grew to 63.9 from 61.3, the new orders index was at 63.2, up from 60.5; backlog of orders dropped to 56.5 from 60.5; new export orders increased to 60.5 from 57.5; inventories declined to 53.5 from 57.5; inventory sentiment decreased to 57.5 from 61.0; the supplier deliveries index slid to 55.5 from 58.5; and imports fell to 51.5 from 54.0.

Members' general comments on business in the month included:

  • “Tariffs, freight [issues] and labor shortages continue to have an inflationary influence on costs.” (Construction)
  • “Positive outlook — business activity on the uptick.” (Finance & Insurance)
  • “Shortage of IV solutions and drugs continues to be an issue.” (Health Care & Social Assistance)
  • “Crude prices are causing concern, as it is a driver in newsprint inks. Tariffs on paper and aluminum are causing apprehension about future pricing. Suppliers are posturing and threatening price increases, and we are doing our best to reject increases.” (Information)
  • “Trade tariffs are creating price uncertainty.” (Management of Companies & Support Services)
  • “Domestically, we are still experiencing a shortage of transportation providers that is getting worse each month when retiring drivers or drivers moving into other opportunities are not being replaced. Internationally, there is a shortage of flat racks [that] has caused late shipments. The tariffs on steel and aluminum have also had some negative effects on our supply of material, but we have applied for exemptions.” (Other Services)
  • “Oil price stabilization has led to increased hiring in some sectors of the industry, as well as a small increase in major capital projects for offshore drilling companies. Oil-field services hiring continues to be strong, as does hiring and capital spending in the petrochemical and downstream sectors of the industry.” (Professional, Scientific & Technical Services)
  • “Commodity prices [are] increasing due to demand and transportation costs.” (Public Administration)
  • “Sales have remained strong and are continuing to increase. Currently, we are on pace for a top-line record. The bottom line is more flat, as we have been fighting commodity cost increases and exchange-rate variances throughout the first half of 2018.” (Retail Trade)
  • “Wire sales improve as contractors ramp up with the rise in copper. We’re seeing ongoing price increases in nearly all commodities due to higher freight expenses by manufacturers and shortage of truck drivers.” (Wholesale Trade)

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