US June ISM Services: Fiscal and reopening tailwinds beginning to fade

The ISM index for the service sector showed a larger-than-expected decline in June. According to analysts at Wells Fargo, the pullback in the June ISM Services index from its record high last month is illustrative of the fiscal and reopening tailwinds beginning to fade. They point out bottlenecks show tentative signs of easing and eventually allaying some price pressures, but they warn there is still a long way to go before looking anything like “normal”.

Key Quotes:

“After indicating a record pace of expansion last month, the ISM Services index slipped nearly four points in June. At 60.1, the index is consistent with activity remaining hot this summer, but points to fiscal and reopening tailwinds beginning to ease. The slower pace of services activity in June can be traced in part to weaker growth in current activity (down 5.8 points to 60.4) and new orders (down 1.8 points to 62.1), but supply issues, particularly for labor, continued to restrain the overall pace of growth.”

“The biggest drag on the June's composite reading came from employment. The hiring index fell below the all-important 50 threshold designating expansion, in contrast with the solid pickup in services employment (+642K net jobs) reported in last week's employment report for June.”

“Tight supply continues to give way to increasing input costs for parts, materials and labor. Although the prices paid component slipped 1.1 points to 79.5, June marks the fifth consecutive month in which the index came in north of 70 and the second highest reading since 2008. All but one industry -agriculture - reported higher prices paid during the month.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.