Economic activity in the U.S. service sector grew faster than expected in the month of June, the Institute for Supply Management revealed in a report released on Wednesday.
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. Economists had expected the index to inch up to 53.3.
With the bigger than expected increase, the non-manufacturing index rose to its highest level since reaching 56.6 last November.
"According to the NMI, 15 non-manufacturing industries reported growth in June," said Anthony Nieves, chair of the ISM Non-Manufacturing Business Survey Committee. "Respondents' comments are mostly positive about business conditions and the economy."
He added "Overall, the report reflects a strong rebound from the 'cooling-off' of the previous month for the non-manufacturing sector."
The bigger than expected increase by the headline index was partly due to notably faster growth in new orders and business activity, as the new orders index spiked 5.7 points to 59.9 and the business activity index surged up 4.4 points to 59.5.
The report also indicated a turnaround by employment in the service sector, as the employment index climbed to 52.7 in June from 49.7 in May.
On the inflation front, the prices index edged down to 55.5 in June from 55.6 in May, although the reading above 50 suggests prices increased for the third consecutive month.
The ISM released a separate report last Friday showing that U.S. manufacturing activity registered growth for the fourth consecutive month in June.
The report said the purchasing managers index jumped to 53.2 in June from 51.3 in May, while economists had expected the index to inch up to 51.5.
With the bigger than expected increase, the ISM's manufacturing index rose to its highest level since reaching 53.3 in February of 2015.
by RTT Staff Writer
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