The US services sector growth slowed in June, with the Purchasing Managers' Index (PMI) falling to 54.0 from 54.5 in May, indicating continued expansion but at a reduced pace [1, 2, 3]. Employment in the sector showed improvement, rebounding to 51.2 after contracting for three consecutive months [1, 2, 3]. New orders declined to 55.1 from 57.3 in May, signaling slower demand growth, though order backlogs nonetheless increased during the month [1, 2, 3].
Prices paid by services businesses decreased to 67.7 in June from 71.3 in May, easing inflation pressures but remaining elevated [1, 2, 3]. Supply chain delays persisted, with supplier deliveries slowing at a PMI sub-index of 54.4, slightly better than May's 55.2, indicating some modest improvement [1, 2].
The geopolitical situation also affected commodity prices. The US-Israeli conflict involving Iran had driven prices higher, including oil, but a ceasefire agreement in June brought oil prices back to pre-war levels [1, 2]. Meanwhile, businesses continued heavy investment in artificial intelligence, pushing up prices for semiconductors and electronics [1, 2].
Economic growth slowed in the second quarter, with the Atlanta Federal Reserve estimating US GDP growth at an annualized 1.2%, down from 2.1% in the first quarter [2]. Consumer spending nearly stalled during the quarter, reflecting cautious demand [2]. Despite the slower job growth in June, most economists expect the Federal Reserve to continue raising interest rates through 2026 [2].
On July 6, the Institute for Supply Management released these data, showing the sector's slower growth and easing inflation pressures amid persistent supply constraints and mixed demand signals [1, 2]. The ceasefire in the Middle East and steady investment in technology remain key influences on the sector's outlook [1, 2].
