- Global services PMI last month 54.8
- S&P global services PMI index for June 55.3 vs 51.1
- S&P global composite PMI index for June 54.8 versus 54.6 preliminary
- Prior month composite index 54.5
Details from the service sector:
- Growth momentum in the US service sector improved in June, with sharper increases in business activity and new orders.
- Workforce numbers increased for the first time in three months despite growing backlogs.
- Rates of input costs and output prices eased but remained above pre-pandemic levels due to higher labor costs.
- S&P Global US Services PMI® Business Activity Index rose to 55.3 in June from 54.8 in May, marking the highest expansion since April 2022.
- Increase in customer numbers and successful marketing contributed to new order growth.
- New business expanded at the fastest pace in a year despite weak demand from abroad, particularly Europe.
- Employment in the sector rose, ending a two-month decline, with job creation at its highest since May 2023.
- Service providers faced capacity challenges due to job cuts and quicker inflow of new business, leading to a slight increase in outstanding business.
- Input cost inflation softened but remained above pre-pandemic levels, mainly due to staff pay increases.
- Service providers increased selling prices in response to higher operating costs, continuing a trend since June 2020.
- Business confidence reached a five-month high, driven by new order increases and expectations of lower interest rates.
- Some firms anticipated that post-election stability would further support growth by ending client hesitancy to commit to new projects.
Comments from Chris Williamson, Chief Business Economist at S&P Global Market Intelligence:
"US service sector companies reported an encouragingly solid end to the second quarter, with output rising at the fastest rate for over two years. Both new order inflows and hiring have also accelerated, the latter buoyed by firms taking on more workers in response to rising backlogs of work."
"With additional – albeit more muted – support coming from the manufacturing sector, the survey data point to GDP rising at an annualized 2.0% rate in the second quarter, with a 2.5% rate seen for June. Forward momentum is therefore gathering pace."
"There is some nervousness creeping in regarding the post-election business environment, but for now at least confidence about the outlook for the coming year remains elevated by recent standards and supportive of businesses investing in expansion."
"Some of this optimism relates to ongoing convictions that interest rates will start to fall before the end of the year. In this respect, a further cooling of price pressures in the survey – notably in the services sector – adds to signs that inflation should trend lower in the coming months to open the door further for rate cuts."
The more closely watched ISM PMI nonmanufacturing Index will be released at 10 AM at with expectations of 52.5.. The S&P employment component rose to the highest level since May 2023. The ISM nine infection component is expected to contract with the index at 47.1.