Services pick up augurs well for US outlook
07/07/2015 15:43

Services in the US expanded at a quicker pace in the month of June, signaling a pickup in the world’s biggest economy which likely returned to growth in Q2 after a dismal first quarter when transitory factors including poor weather coupled with a stronger dollar led to a mild contraction.

The gauge measuring services in the US climbed to 56 in June from 55.7 in May, with a reading above 50 signaling expansion, the Institute for Supply Management (ISM) reported on Monday.

June’s services reading just missed analysts estimates of 56.4.

A rebound in consumer spending, that accounts for about 70 per cent of the American economy is good news for American services firms including restaurants, retailers and real estate companies.

A pickup in payrolls growth is boosting American consumer sentiment, allowing them more leeway to undertake discretionary spending.

The sub-index measuring new orders in the US services sector rose to 58.3 in June from 57.9 in the previous month, signaling a pickup in demand.

Strong domestic demand including strength in the housing sector is helping counter softness in the American manufacturing sector which has been hit by a rampant dollar that has dimmed the competitiveness of American manufacturing shipments in overseas markets.