ISM Reports Rebound in Services Sector; S&P Global Indicates Growth Slowing Down

12:58 PM EDT, 07/03/2025 (MT Newswires) -- The US services sector swung back into expansion territory last month, Institute for Supply Management data showed Thursday, while an S&P Global (SPGI) survey indicated a slowdown in momentum.

The ISM's purchasing managers' index rose to 50.8 in June from 49.9 the month prior. The consensus was for a rise to 50.6 in a survey compiled by Bloomberg. Economic activity in the services sector has expanded in 11 of the last 12 months. A reading below 50 indicates contraction.

The measure for business activity improved by 4.2 points to 54.2 in June, while new orders index jumped to 51.3 from 46.4 in May. However, the employment gauge fell into contraction territory.

"June's PMI level is a welcome return to expansion, although slow growth and economic uncertainty were frequently referenced by respondents," said Steve Miller, chair of the ISM's services business survey committee. "The most common topic among survey panelists continued to be concerns about impacts related to tariffs."

On Wednesday, President Donald Trump announced a trade deal with Vietnam. After announcing sweeping new tariffs early in April, the US leader put a 90-day pause on certain levies for non-retaliating countries. Trump recently said he wasn't considering extending the July 9 deadline to re-impose higher tariffs.

Separately, S&P Global (SPGI) said its services PMI gauge dropped to 52.9 in June from 53.7 the month before. The consensus in a Bloomberg survey was for a reading of 53.1.

"The US service sector reported a welcome combination of sustained growth and increased hiring in June, but also reported elevated price pressures, all of which could add to pressure on policymakers to remain cautious with regard to any further loosening of monetary policy," S&P Global Market Intelligence Chief Business Economist Chris Williamson said.

Last week, Federal Reserve Chair Jerome Powell said that the world's biggest economy was in a "solid position" despite elevated uncertainty levels. Policymakers can continue to wait and evaluate how the economy responds to policy changes before the central bank adjusts its benchmark rate, he told US lawmakers.

"We are seeing some worrying signs of weakness below the headline numbers, however, notably in respect to exports and falling activity among consumer-facing service providers, which has curbed the overall pace of economic expansion," Williamson said.

On Tuesday, ISM data showed a fourth straight monthly contraction for the US manufacturing sector, while S&P Global's (SPGI) survey indicated an acceleration in growth.

Price: 528.40, Change: +2.76, Percent Change: +0.52

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.