High gas and food prices have left consumers with less money to spend on discretionary goods, hurting restaurants.
(Richard Drew/Associated Press)
June service industry growth slows
High gas and food prices have left consumers with less money to spend on discretionary goods, hurting restaurants.
(Richard Drew/Associated Press)
WASHINGTON - The US service sector, which employs nearly 90 percent of the country’s workforce, expanded for a 19th consecutive month in June. But growth slowed from May, a sign that the economy remains sluggish.
The Institute for Supply Management said yesterday that its index for service companies dipped to 53.3 in June from 54.6 in May. Any reading above 50 indicates expansion.
The private trade group measures activity for a broad range of industries, including retail, health care, financial services, and construction.
The index reached a five-year high of 59.7 in February. But since then growth has retreated. The index fell to 52.8 in April, the lowest reading since August.
High gas and food prices have left consumers with less money to spend on discretionary goods, such as vacations, appliances, and furniture. That has hurt retailers, restaurants, and hotels.
Paul Ashworth, chief US economist at Capital Economics, said the report “is a reminder that the economy is still pretty sluggish.’’ He said the June reading was consistent with overall growth of around 2 percent in the April-June quarter. An employment index in the service sector report showed a gain in June. That suggests hiring expanded for a 10th straight month and at a slightly faster pace than in May.
Still, employers added only 54,000 net new jobs in May, much slower than the average gain of 220,000 per month in the previous three months.
The government reports tomorrow on hiring data in June. Economists expect the economy added only 90,000 jobs and the unemployment rate will remain at 9.1 percent, according to survey by FactSet.
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