US services firms grew in June at fastest pace in 7 months

The latter was a weak reading that indicated a possible fall in employment.

The ISM said its non-manufacturing index jumped to 56.5 in June from 52.9 in May, with a reading above 50 indicating growth in the service sector. The elevated reading now sits at its highest level since November 2015, after just previously hitting its lowest level since February 2014 in May.

Andrew Hunter, Assistant Economist at Capital Economics, said, “The rebound in the ISM index reinforces our view that the US economy remains on a firm footing”.

“Consumers are looking pretty good”, Sophia Kearney-Lederman, an economic analyst at FTN Financial in NY, said before the report. Any reading above 50 signals growth. Fifteen of 18 industries reported growth in June, including mining, entertainment, retail and real estate.

“We had a couple months in there with some cooling off, but now with this nice pop up here, we’ll see how sustainable it is going forward”, said Anthony Nieves, chairman of the ISM non-manufacturing survey.

The Institute for Supply Management published a supplemental ISM Report on Business that looked at Brexit and the impact it may have on both manufacturing and non-manufacturing businesses.

“The service sector represents 70 percent of the United States economy and the chances of dramatic slowdown in the USA economy are reduced”, Morelock said. Changes in global demand was secondary.

Details from the services survey showed the new orders index climbed to 59.9 in June from 54.2.

US service-sector activity picked up in June, a sign the economy is slowly picking up steam after a lackluster start to the year. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 1.8 basis points to 1.385 percent.

A measure of employment increased to 52.7 from 49.7.

Prices are increasing but at a slower rate, with the Prices Index dropping 3% from 63.5% in May to 60.5% in June. Economists expect the economy to grow at least twice as fast from April through June, lifted by a pickup in consumer spending. Fourteen of the eighteen industries surveyed reported growth, while two industries, Professional, Scientific & Technical Services and Educational Services, reported contraction.