TEMPE, Ariz. – Growth among non-manufacturing businesses last month surprised analysts by accelerating to the fastest pace since April 2006, according to a report today from the Institute for Supply Management.
“Non-manufacturing business activity increased for the 51st consecutive month in June,” wrote Anthony Nieves, chair of the ISM’s Non-Manufacturing Business Survey Committee and senior vice president of supply management for Hilton Hotels Corp. “The Business Activity Index registered 60.7 percent, the highest since April 2006, when it registered 61.1 percent,” he added.
The ISM’s Non-Manufacturing Business Activity Index rose 1 percentage point from its May reading of 59.7 percent. (Readings higher than 50 indicate growth; since its launch in July 1997, the index has averaged 57.7 percent.) A 1.7-percentage-point decline, to 58.0 percent, had been the median prediction in a Bloomberg News survey of 73 economists, whose estimates ranged from 54.9 to 62.3.
The ISM’s Employment Index for non-manufacturing industries also increased at a faster rate than in May, edging up 0.1 percentage point in June to 55.0 percent from the previous month’s 54.9 percent, as employment grew for the 35th straight month.
The New Orders Index dipped 0.5 points to 56.9 percent, while the Prices Index fell 0.9 points to 65.5 percent, “both indicating growth at a slower rate than in May.”
All 14 of the non-manufacturing industries tracked by the survey “reported increased activity in June,” Nieves said. Seeing the fastest growth was the Construction sector, led by Real Estate, Rental and Leasing; Arts, Entertainment and Recreation; Other Services; Accommodation and Food Services; Finance and Insurance; Educational Services; Public Administration; Utilities; Retail Trade; Management of Companies and Support Services; Information; Health Care and Social Assistance; and Wholesale Trade.
The U.S. manufacturing sector also grew in June at the fastest pace in 14 months, according to a separate ISM report released on Monday. (READ MORE)
“The uptick in service employment is encouraging,” Stephen Gallagher, chief U.S. economist at Societe Generale in New York, told Bloomberg News. “Together with the manufacturing report, the numbers suggest good, solid growth going forward.”
The Institute for Supply Management, publisher of Inside Supply Management magazine, produces monthly Reports on Business for the manufacturing and non-manufacturing sectors. Additional information is available at www.ism.ws.
