[Stay on top of transportation news: Get TTNews in your inbox.]
Service sector expanded at slower pace in June
Hiring picks up on World Cup demand
Key Takeaways:
- The Institute for Supply Management said July 6 its services index fell 0.5 point to 54 in June, showing continued expansion at a slower pace.
- Cooling business activity and new orders, easing price pressures and a drop in energy costs alongside steady demand helped firms expand hiring, lifting the employment index.
- The data suggest services growth remains resilient, though hiring trends may stay uneven as separate government figures showed slower overall U.S. payroll gains in June.
The U.S. service sector expanded in June at a slightly slower pace, but firms boosted payrolls as cost pressures eased.
The Institute for Supply Management’s services index decreased 0.5 point to 54, according to data released July 6. Readings above 50 indicate growth, and the figure was in line with economists’ expectations.
Measures of business activity and new orders cooled, though still signaled solid demand. ISM’s employment index, meanwhile, jumped by the most since 2024 and indicated higher headcount for the first time since February.
Prices continued to rise but at a more subdued pace. The group’s gauge fell to a four-month low of 67.7.
An interim deal between the U.S. and Iran has led the prices of oil and gasoline to drop in recent weeks, following a war-driven surge. While companies continue to face other cost pressures, such an easing — paired with resilient consumer demand — may have offered firms more space to pursue hiring plans.
Steve Miller, chair of ISM’s Services Business Survey Committee, said on a call with reporters that World Cup-related hiring likely contributed to the increase in the employment index.
.@ISM Services PMI® Report: Business activity and new orders growth slowed in June but remained strong, there was (some) relief on prices, #employment returned to expansion and inventory levels leveled off as the #ISMPMI was down slightly, to 54%. https://t.co/ej67iXt52C #economy — Institute for Supply Management (@ism) July 6, 2026
A measure of inventories, which had surged in May, dropped sharply in June. Miller noted that drop suggests companies are no longer stockpiling goods to get ahead of war-related supply-chain disruptions. A gauge of order backlogs rose.
Miller also said respondents commented less frequently about the prices of petroleum products, but he said tariffs continued to be an issue. He also noted there was an increase in commodities listed as in short supply in June.
“All commodities in short supply in June are commodities necessary for data center construction,” Miller said.