Services firms log July sag in growth
WASHINGTON — U.S. services firms grew last month at the slowest pace since August 2016, a performance consistent with only modest economic growth.
The Institute for Supply Management said Thursday that its services index slipped in July to 53.9 from June’s 57.4. It was the lowest reading since the index registered 51.7 in August 2016. Still, anything above 50 signals growth, and American services companies are on a 91-month winning streak.
Production, new orders, hiring and export orders all grew more slowly in July.
The index came in lower than economists had expected and below the 55.9 average over the past 12 months. Anthony Nieves, chair of the institute’s services survey committee, said the July reading is consistent with overall U.S. economic growth of 1.9 percent a year, a mediocre pace and about what the economy has averaged so far this year. Growth picked up to a 2.6 percent annual pace from April through June after getting off to a slow 1.2 percent start the first three months of 2017.
Still, Nieves said he sus-
pects that the slowdown just reflects the summer doldrums. He noted that respondents to the survey “project that things will pick up going into the fall.”
Services are an important component of the U.S. economy. Private-sector service workers — from cashiers to stock brokers to nurses — hold more than 70 percent of American jobs.
Consumer spending on services, which accounts for nearly half of U.S. economic activity, rose at a 1.9 percent annual pace from April through June, the slowest pace since the first quarter of 2016, the Commerce Department reported recently.
Orders at U.S. factories increased in June as demand surged for aircraft.
The Commerce Department said Thursday that factory orders increased 3 percent in June, a solid rebound after declining in May and April. But the gains largely came from a 131 percent jump in orders for civilian aircraft, a volatile category.
U.S. manufacturing has been recovering from a slowdown in late 2015 caused by lower energy prices and a strong dollar that made American products more expensive overseas. Factories have responded with a relatively slight upturn in hiring. Manufacturers added a modest average of 8,833 jobs during the first six months of this year.
Excluding the transportation sector that includes aircraft, factory orders slipped A restaurant in 0.2 percent in June.
Demand fell for computers and electronic products, while primary metals, machinery and motor vehicles eked out gains.
Other manufacturing indicators point to continued but cautious growth.
The Institute for Supply Management said Tuesday that its index of factory activity fell 1.5 points to 56.3 in July. Still, any reading above 50 signals that manufacturers are expanding.
Separately, the Federal Reserve said that factory production advanced 0.2 percent in June and 1.2 percent over the 12 months from June 2016.
Fewer Americans applied for unemployment aid last week, keeping the number of people seeking benefits close to historic lows.
Weekly unemployment applications fell by 5,000 to 240,000, the Labor Department said Thursday. The less volatile four-week average declined 2,500 to 241,750. The number of people collecting unemployment benefits has fallen 8.6 percent over the past 12 months to about 2 million.
The job market appears solid as the U.S. enters its ninth year of recovery from recession. Employers are holding on to workers with the expectation that business will continue to improve. Joblessness claims — a close indication of layoffs — have come in below 300,000 for 126 weeks in a row. That’s the longest such stretch since 1970, when the U.S. population was much smaller.
The unemployment rate has fallen to a healthy 4.4 percent. Economists expect the government’s report for July, to be issued today, to show that U.S. employers added 180,000 jobs.
The Federal Reserve said last week that it’s keeping its key interest rate unchanged at a time when inflation remains undesirably low despite the job market continuing to strengthen.