U.S. service sector growth in July hits three-year low

The U.S. non-manufacturing sector in July expanded at the slowest pace in nearly three years, the Institute for Supply Management (ISM) said on Monday. 

The non-manufacturing index (NMI), which gauges the performance of the services sector, was 53.7 percent in July, down 1.4 percentage points from the June reading, according to the latest Non-Manufacturing ISM Report on Business. The May reading was 56.9 percent. 

This is the index's lowest reading since August 2016, when it registered 51.8 percent, said Anthony Nieves, chair of ISM's non-manufacturing business survey committee, noting that the non-manufacturing sector's rate of growth "continued to cool off." 

"Respondents indicated ongoing concerns related to tariffs and employment resources. Comments remained mixed about business conditions and the overall economy," Nieves said.

VCG Photo

VCG Photo

Nieves said 13 non-manufacturing industries reported growth, while five industries reported a decrease: arts, entertainment & recreation; agriculture, forestry, fishing & hunting; retail trade; wholesale trade; and educational services. 

"The past relationship between the NMI and the overall economy indicates that the NMI for July corresponds to a 1.8-percent increase in real gross domestic product (GDP) on an annualized basis," Nieves said. 

The July index indicated continued growth in the non-manufacturing sector for the 114th consecutive month, the report said. A reading above 50 percent indicates that the non-manufacturing sector economy is generally expanding. 

According to data released by the ISM last week, the July purchasing managers' index (PMI), which gauges the performance of the manufacturing sector, registered 51.2 percent, down by 0.5 percentage point from the June reading. 

Founded in 1915, the ISM serves supply management professionals in more than 90 countries and regions, boasting 50,000 members around the world.

Source(s): Xinhua News Agency