The U.S. services sector expanded for the 24th consecutive month in June with a PMI of 54 percent, led by a rebound in e

The Institute for Supply Management reported that economic activity in the services sector continued to expand in June based on data from the nation's purchasing and supply executives. The Services PMI registered 54 percent, representing the 24th consecutive month of expansion. The index decreased slightly by 0.5 percentage point from May's figure of 54.5 percent.

The Business Activity Index remained in expansion territory at 55.4 percent, down 2.3 percentage points from May's 57.7 percent. The New Orders Index registered 55.1 percent, 2.2 percentage points below May's 57.3 percent. In a welcome sign of renewed confidence, the Employment Index expanded for the first time in four months, rising to 51.2 percent from May's 47.9 percent, a 3.3-percentage point increase. All four subindexes comprising the composite PMI remained above their 12-month moving averages.

The Supplier Deliveries Index registered 54.4 percent, 0.8 percentage point lower than May's 55.2 percent, marking the 19th consecutive month in expansion territory and indicating slower supplier delivery performance as customer demand increases.

The Prices Index decreased to 67.7 percent in June, 3.6 percentage points below May's 71.3 percent and its first time below 70 percent since February. Despite this moderation, the index has exceeded 60 percent for 19 straight months, maintaining its 12-month average of 68 percent. Diesel, gasoline, oil and related commodities were again most frequently mentioned as price increases, though some respondents reported reduced prices for these items due to different contract terms between companies.

The Inventories Index dropped sharply to 51.2 percent, down 11.3 percentage points from May's 62.5 percent, suggesting that the buy-ahead phenomenon from earlier in the year may have ended. The Inventory Sentiment Index expanded for the 38th consecutive month at 52.6 percent, down 2.6 percentage points from May. The Backlog of Orders Index remained in expansion for a fifth straight month, increasing to 54.9 percent from May's 51.3 percent. New Export Orders stayed at 50 percent or above for the fifth consecutive month, reaching 50.4 percent in June, while the Imports Index dropped into contraction territory at 49.4 percent, down 1.7 percentage points from May's 51.1 percent.

Fourteen industries reported growth in June, three fewer than in May, while four industries reported contraction, up three from May. The June Services PMI reading of 54 percent is 0.9 percentage point above the 12-month average of 53.1 percent, with the 12-month average itself increasing for the sixth consecutive month to 52.8 percent.

West Texas Intermediate crude oil dropped below 70 dollars per barrel in late June for the first time since February, representing a more than 30 percent decline from recent highs. While petroleum-related products continued to be cited as up in price, this moderation suggests relief from current supply chain pressures as oil moves through the Strait of Hormuz.

Despite the slight decreases in Business Activity and New Orders indexes, the increases in the Employment Index offset these declines, with all four subindexes now in expansion territory above their 12-month averages. Nine of the 18 services industries, representing over 58 percent of U.S. gross domestic product, reported higher employment levels in June, indicating widespread confidence in hiring. World Cup-related hiring in the U.S. likely contributed to the Employment Index increase.

Nine commodities were reported in short supply in June, up from five in May, with all of them necessary for data center construction. Memory components, copper, aluminum, and heating, ventilation and air conditioning equipment continued multimonth runs of price increases. Respondents cited tariff impacts as a continuing theme for increased pricing pressure while commenting less frequently on petroleum product pricing impacts. The Utilities and Information industries continued runs of more than six months in expansion territory.

The 14 industries reporting growth were Arts, Entertainment and Recreation; Mining; Wholesale Trade; Transportation and Warehousing; Finance and Insurance; Accommodation and Food Services; Retail Trade; Other Services; Professional, Scientific and Technical Services; Health Care and Social Assistance; Information; Construction; Utilities; and Real Estate, Rental and Leasing. The four industries reporting contraction were Agriculture, Forestry, Fishing and Hunting; Educational Services; Management of Companies and Support Services; and Public Administration.