(Kitco News) – The U.S. service sector improved on balance last month, with business activity and prices improving while employment worsened, according to the latest data from the Institute for Supply Management (ISM).
The ISM announced on Thursday morning that its Services Purchasing Managers Index rose to 50.8 in June, up from May’s reading of 49.9. The data was better than expected, as economists were looking for a reading of 50.5.
Readings above 50 in such diffusion indexes signify economic growth and vice versa. The farther an indicator is above or below 50, the greater or smaller the rate of change.
Gold pared some of its earlier losses following the 10 am EDT release. Spot gold last traded at $3,333.82 per ounce for a loss of 0.69% on the daily chart.
The components of the report showed the sector improving in most areas. The New Orders Index rose to 51.3, up from 46.4 in May, and the Supplier Deliveries Index fell to 50.3 from 52.5 recorded the prior month, while the Employment index fell to 47.2 from the 50.7 reading the prior month.
At the same time, the Business Activity Index rose to 54.2, compared to May’s reading of 50, and inflation pressures eased somewhat in the sector, with the Prices Index coming in at 67.5, down from 68.7 in May.
“Ten industries reported growth in June, the same number as reported in May,” said Steve Miller, chair of the Institute for Supply Management Services Business Survey Committee. “The Services PMI has expanded in 57 of the last 61 months dating back to June 2020. The June reading of 50.8 percent is 1.6 percentage points below the 12-month average reading of 52.4 percent.”
“June’s PMI level is a welcome return to expansion, although slow growth and economic uncertainty were frequently referenced by respondents,” Miller said. “This month’s reading is equal to the average reading of 50.8 percent over the prior three months, indicating both stability and slight expansion in that time period. Both the Business Activity and New Orders indexes returned to expansion territory, although the Backlog of Orders Index contracted at a faster rate compared to May.”
“Price increases impacting costs of operations were mentioned more frequently this month,” he added. “Middle East tensions were a new subject of comments in June, but there was no indication of related supply chain disruptions. The most common topic among survey panelists continued to be concerns about impacts related to tariffs.”
