The services sector experienced slower growth in June, according to an Institute for Supply Management report released today. The Institute's Non-Manufacturing Index dropped to 52.2%, down 1.5 points from May's 53.7%. Analysts were entirely off the mark, having expected expanding growth in June to 54.5%.
An above-50 rating signals overall expansion, and the services sector has managed to increase its economic activity for 42 consecutive months. The index is composed of 10 components, with five decreasing in June.
For May, the largest drop is also the most significant. New orders, a component that is interpreted as a proxy for economic expectations, plummeted 5.2 points to 50.8%, nearing the point of contraction. New export orders took a smaller 2.5 point dip but ended up in the red at 47.5%. As a sign of some longer-term optimism, the employment component registered a solid 4.6 point increase to 54.7%.
Today's report comes after ADP announced that 161,000 services sector jobs were added to the market in June.