US Services PMI Falls to 54 in June, Hiring Improves

The U.S. services sector continued to expand in June, though at a slightly slower pace, as businesses reported steady demand, easing inflation pressures, and a rebound in hiring after several months of contraction. The Institute for Supply Management's Services Purchasing Managers Index slipped to 54 in June from 54.5 in May, remaining well above the 50 mark that signals expansion.

While the overall sector grew, the latest business surveys offered a nuanced picture. The ISM survey found business activity and new orders cooled from May's pace but continued to point to healthy demand. Its employment index climbed to 51.2 from 47.9, returning to expansion for the first time since February and recording its biggest monthly gain since 2024. This suggests service firms added workers in June. However, a separate survey from S&P Global presented a different view, reporting that employment continued to decline even as new business strengthened, indicating some companies remained cautious about adding staff.

Inflation pressures eased during the month. The ISM's prices paid index dropped to 67.7 from 71.3 in May, marking its lowest level in four months. Economists noted the decline...