RTTNews - While the Institute for Supply Management released a report on Monday showing that activity in the service sector contracted for the ninth consecutive month in June, the pace of contraction slowed by even more than economists had been expecting.
The ISM said its index of activity in the service sector rose to 47.0 in June from 44.0 in May, although a reading below 50 indicates a contraction. Economists had been expecting the index to come in at 46.0.
Commenting on the data, Anthony Nieves, chair of the ISM Non-Manufacturing Business Survey Committee noted, Respondents' comments continue to be mixed and tend to be industry- and company-specific about business conditions.
A slower pace of contraction in new orders contributed to the improvement in the sector, with the new orders index rising to 48.6 in June from 44.4 in May.
The employment index also rose to 43.4 in June from 39.0 in May, although it still indicated the fourteenth consecutive month of contraction in employment in the service sector.
Meanwhile, the inventories index edged down to 45.0 in June from 47.0 in the previous month, indicating a faster pace of contraction.
On the inflation front, the prices index jumped to 53.7 in June from 46.9 in May, climbing above the key 50 level since October of 2008.
Last week, the ISM said its index of activity in the manufacturing sector rose to 44.8 in June from 42.8 in May. The index came roughly in line with the expectations of economists, who forecast a reading of 44.6.
Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee said, Manufacturing continues to contract at a slower rate, but the trends in the indexes are encouraging as seven of 18 industries reported growth in June.
Ore said that a turnaround in production was the most encouraging sign, with the production index jumping to 52.5 in June from 46.0 in May. With the increase, the index rose above 50 for the first time since July of 2008 and reached its highest level since January of 2008.
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