By Geoffrey Smith
Investing.com -- A closely watched gauge of the U.S. service sector fell to its lowest in 20 months in June, but held up better than expected despite ongoing pressures from high costs for labor and other inputs.
The Institute of Supply Management said on Wednesday that its non-manufacturing purchasing managers index fell to 55.3 from 55.9 in May. While that suggests activity is weakening, it's still better than the consensus forecast of 54.3 ahead of time.
"The slight slowdown in services sector growth was due to a decline in new orders and employment," the ISM's Anthony Nieves said in a statement. "Logistical challenges, a restricted labor pool, material shortages, inflation, the coronavirus pandemic and the war in Ukraine continue to negatively impact the services sector.” The employment subindex fell to a level suggesting contraction, he noted.
Separately, the Labor Department had given another sign that the red-hot labor market may be starting to cool. Job openings, as measured by its monthly survey, fell in May, to a level of 11.254 million that is still high by historical comparison. The number was around a quarter of a million more than expected ahead of time, and the department also revised up May's number substantially to 11.681 million.