US services sector activity shrinks very sharply in June, ISM says

(Sharecast News) - Services sector activity in the US slowed very sharply last month, a closely followed survey showed. Significantly, many of the survey's respondents referenced the impact of high costs and prices during the month.

The Institute for Supply Management's services sector Purchasing Managers' Index fell from a reading of 53.8 for May to 48.8 in June.

Economists had forecast a reading of 52.5.

A subindex for production dropped from 61.2 to 49.6, while that for new orders declined from 54.1 to 47.3.

Another key subindex, that for employment, dipped from 47.1 to 46.1.

Price pressures abated a tad alongside with the corresponding subindex slipping from 58.1 to 56.3.

"Alongside a decline in the ISM manufacturing index, these surveys suggest that GDP growth will remain weak in the third quarter," said Olivia Cross, North America economist at Capital Economics.

"They also add to evidence that labour demand is softening, and inflation will remain on a downward trend."

-- More to follow --