Economic activity in the nation’s service sector inched higher in June after hitting a 13-month low in May, according to a survey of the nation’s supply executives.

The latest reading of the Non-Manufacturing Index from the Institute for Supply Management shows its at 56%, 0.3 of a percentage point higher than the month before, indicating the sector grew for the 65th straight month.

A reading above 50% indicates the non-manufacturing sector economy is generally expanding. Below this level indicates contraction.

According to the NMI, 15 of the 18 non-manufacturing industries reported growth in June,  with the majority of respondents' comments being positive about business conditions and the economy.

The Non-Manufacturing Business Activity Index increased to 61.5%, which is 2 percentage points higher than the May reading, while the New Orders Index registered 58.3%, 0.4 of a percentage point higher. In contrast, The Employment Index and the Prices Index decreased.

Another view

A separate report from the financial information services provider Markit shows growth in the non-manufacturing sector slowed in June.

Its final U.S. Services Business Activity Index registered 54.8 in June, down from 56.2 in May -- but still above the neutral 50 threshold for the twentieth successive month.

The latest reading pointed to the least marked pace of expansion since January, although the index was only slightly below the average seen since the survey began in late 2009 at 55.8.

Also, the seasonally adjusted final Markit U.S. Composite PMI Output Index (covering manufacturing and services) posted 54.6 in June, down from 56 in May and the lowest reading since January.

A softer overall increase in U.S. private sector business activity reflected weaker growth contributions from both services activity and manufacturing output, according to Markit.

“The June PMI data round off a solid second quarter for the US economy, with gross domestic production likely to have risen at an annualized 3% rate. However, it’s important to look at what’s happened over the course of the quarter, rather than looking at the quarter as a whole,” said Chris Williamson, chief economist at Markit. "Although still signaling moderate growth in June, the manufacturing and service sector surveys indicate that the rate of economic expansion has slowed markedly since the start of the quarter, when business was boosted by a rebound from weather-related weakness."

He said this the loss of growth momentum seen in the surveys means GDP growth could slacken off again in the third quarter. Hiring could likewise ease.

“Federal Reserve talk will most likely continue to prepare the ground for rate hikes later this year, but policymakers will want to see firmer evidence that the economy retains healthy growth momentum before taking the plunge and hiking interest rates, especially given ongoing disappointing pay growth and benign inflation,” Williamson said.

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