A report released by the Institute for Supply Management on Thursday showed growth in activity in the U.S. service sector unexpectedly accelerated in the month of June.
The ISM said its non-manufacturing index rose to 59.1 in June after climbing to 58.6 in May, with a reading above 50 indicating growth in the service sector. Economists had expected the index to edged down to 58.3.
The unexpected increase by the headline index was partly due to an acceleration in the rate of growth in business activity, as the business activity index climbed to 63.9 in June from 61.3 in May.
The new orders index also showed a notable increase, jumping to 63.2 in June from 60.5 in the previous month.
On the other hand, the employment index dipped to 53.6 in June from 54.1 in May, indicating a modest deceleration in the pace of job growth in the service sector.
“According to the NMI, 17 non-manufacturing industries reported growth,” said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee.
“Respondents continue to be optimistic about business conditions and the overall economy,” he added. “There is a continuing concern relating to tariffs, capacity constraints and delivery.”
With regard to inflation, the ISM said its prices index dropped to 60.7 in June from 64.3 in May, suggesting a slowdown in the pace of price growth.
The ISM released a separate report on Monday showing growth in activity in the U.S. manufacturing sector also unexpectedly accelerated in the month of June.
The report said the purchasing managers index climbed to 60.2 in June after rising to 58.7 in May. Economists had expected the index to edge down to 58.4.