Service sector growth dips in June; employment rebounds after months of contraction

U.S. services sector activity softened in June, but employment rebounded after three straight months of contraction, suggesting continued labor-market stability. The Institute for Supply Management said its nonmanufacturing purchasing managers index slipped to 54.0 from 54.5 in May, still indicating growth because readings above 50 signal expansion. New orders fell to 55.1 from 57.3, while order backlogs rose. ISM also reported that supplier deliveries were slower, with the supplier delivery index easing to 54.4 from 55.2, pointing more to strained supply chains than strong demand. Services prices increased more slowly as the pace of oil-price gains eased following a ceasefire between Washington and Tehran, which pushed oil back toward pre-war levels. Employment in the ISM services survey rose to 51.2 from 47.9. Economists expected the Federal Reserve to keep rate hikes in view, though June job growth cooled and revisions weakened prior nonfarm payroll gains.