Jul 6, 2023 - Economy & Business

Services sector strengthens as demand surges

Illustration of a grimacing face emoji surrounded by angry market trend arrows.

Illustration: Aïda Amer/Axios

Compared to the ongoing slump in the manufacturing sector, the services sector showed surprising strength last month.

By the numbers: The Institute for Supply Management's services index increased to 53.9 in June — nearly 4 points above the prior month's level.

  • Unlike manufacturing, the services sector remains comfortably in expansionary territory (any reading above 50 indicates as much).

What they're saying: "There has been an uptick in the rate of growth for the services sector. This is due mostly to the increase in business activity, new orders and employment," ISM's Anthony Nieves said in a release.

  • Details: The pickup in activity came alongside a surge in demand. The new orders index rose by 2.6 points, while the prices paid for materials fell by 2.1 points.
  • Meanwhile, the gauge of hiring in the sector continued to expand: The index rose 3.9 points from May.

The bottom line: The services sector — which accounts for far more economic activity than manufacturing — continues to be a source of strength for the U.S. economy.

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