U.S. service sector’s business activity saw a marginal rise in June. The seasonally adjusted final IHS Markit Service Business Activity Index rose to 51.5 in June from May’s 50.9. The latest index figure hinted at a strong growth than the earlier ‘flash’ reading. However, June data indicated just a marginal rise in output that was the second-slowest since August 2016. Where a rise was seen, service providers attributed this to a more rapid upturn in new business.
Domestic and external demand conditions rebounded a bit in June, with both new business and new export orders from abroad rising at a more rapid rates. Although the upturn in foreign demand was widely consistent with the series trend, total new orders rose at the second-slowest rate since April 2017. Some companies saw that greater advertising and marketing had improved new business intakes; however, other continued to lament weak underlying demand conditions.
Subsequently, service providers saw a lower degree of business confidence in June, with the level of positive confidence falling to the lowest since June 2016. Optimism was dragged by greater competition and worries about the strength of future new order growth. A modest growth in new business led to a renewal rise in the level of outstanding business in June, following no-change in May. The pace of backlog accumulation was just marginal but accelerated to a three-month high.
In spite of soft underlying demand conditions throughout the service sector in June, companies continued to expand their workforce numbers in the midst of a tight labor market and difficulties finding skilled staff. The increase in employment was widely consistent with the average for 2019 to date. In the meantime, although input prices rose at a more rate, the rate of inflation remained historically subdued. Increased prices faced by service providers were linked to greater wage and fuel costs. After widely unchanged faced by service providers were linked to greater wage and fuel costs.
Following widely unchanged output charges in May, selling prices rose a bit in June and at the most rapid rate for three months. Companies stated that higher charges were because of the pass though of increased cost burdens to clients.
At 17:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at -25.06 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
