ISM Non-Manufacturing Index Slows Down in June

The Institute for Supply Management’s non-manufacturing business activity composite index slowed more than expected in June, as it fell to a four-month-low of 53.8, from a seasonally adjusted 55.4 in May, the group said Tuesday.

Economists polled by Thomson Reuters had expected a reading of 55.0 for the ISM services sector gauge. Readings below 50 signal a slowing economy, while levels above 50 suggest expansion.

“The index remained above the critical value of 50%, implying continued growth in the non-manufacturing sector, but the pace of growth is moderate rather than brisk,” wrote Michael Moran, chief economist at Daiwa Securities America Inc.

The prices paid component — a closely watched inflation measure — slid to 53.8 from 60.6, while the employment component slowed to 49.7 from 50.4. Moran said the prices paid level suggests “neither inflation nor deflation is an issue.”

The business activity-production index fell to 58.1 from 61.1; new orders dropped to 54.4 from 57.1; backlog of orders declined to 55.5 from 56.0; new export orders fell to 48.0 from 53.5; inventories fell to 58.5 from 62.5; inventory sentiment slowed to 59.0 from 60.5; and imports fell to 48.0 from 56.5. The supplier deliveries component was unchanged at 53.0.

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