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    U.S. Service Industries Expand Modestly in June

    Growth in U.S. service industries maintained its moderate pace in June but the immediate direction of this economically dominant sector was in doubt as improvement in one major survey contrasted with accelerating weakness in another. 

    The Institute for Supply Management's non-manufacturing index rose slightly to 56.0 from 55.7 in May, which had been the lowest reading in 13 months.

    However, the purchasing managers’ index from Markit Economics fell to 54.8 in June from 56.2 the prior month. The index has now dropped for three months in a row since the year's high in March at 59.2 and is at the lowest point since January.  

    Both survey missed forecasts, ISM at 56.4 and Markit at 54.9. The Institute is U.S. based, with headquarters in Tempe Arizona while Markit is a U.K. firm based in London.  The methodology of the two surreys is similar, a reading above 50 indicate expansion. 

    Job creation in the U.S. slipped to a three month low according to Markit, a conclusion mirrored in the ISM where its employment sub-index fell to a five month low at 52.7. 

    The divergence in the results of the two services surveys duplicates a similar result in their manufacturing surveys which were released last week.

    As in today's services information, the factory indexes were close in June, 53.5 for ISM and 53.6 for Markit.

    But Markit had arrived at that point by declining for three straight months from 55.7 in March to 53.6 in June and the ISM by rising for two months from 51.5 in March and April.

    In today's ISM survey new orders rose to 58.3 in June from 57.9 the previous month, as did business activity, up to 61.5 from 59.5 and backorders to 50.5 from 48.5.  Export and imports orders declined. Overseas business slipped to 52.0 in June from 55.0 while imports fell into contraction at 48.0 from 53.5 in May. Prices dropped to 53.0 in June from 55.9 in May. 

     

    Joseph Trevisani

    Chief Market Strategist

    WorldWideMarkets Online Trading

    Charts: Bloomberg

    Services: ISM-white; Markit-yellow

    services july 6

    Manufacturing: ISM

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