U.S. services sector sees 2nd contraction in 3 months as economy slows

WASHINGTON, July 3 (Xinhua) -- Economic activity in the U.S. services sector contracted in June for the second time in the last three months, indicating a slowdown in the economy, the Institute for Supply Management (ISM) reported Wednesday.

The Services Purchasing Managers' Index (PMI) registered 48.8 percent, 5 percentage points lower than the May reading, according to the latest Services ISM Report on Business.

The services sector grew for 15 straight months following a contraction in December 2022, before experiencing a 49.4-percent contraction in April this year. The reading in June was a reversal compared to May and the second in contraction territory in the last three months.

"The decrease in the composite index in June is a result of notably lower business activity, a contraction in new orders for the second time since May 2020 and continued contraction in employment," Steve Miller, chair of the ISM Services Business Survey Committee, noted.

The New Orders Index of 47.3 percent is 6.8 percentage points lower than the May reading. The Employment Index contracted for the sixth time in seven months and at a faster rate in June; the reading of 46.1 percent represents a 1-percentage point decrease compared to May.

"Survey respondents report that in general, business is flat or lower, and although inflation is easing, some commodities have significantly higher costs," Miller said.