US services activity bounces back, treading water on jitters

Activity in the US services sector picked up in June, survey data showed Thursday, bouncing back from a contraction while businesses grapple with worries over President Donald Trump's tariffs.

The Institute for Supply Management's (ISM) services index came in at 50.8 percent last month, rising from 49.9 percent in May.

This was above a consensus expectation of 50.3 percent according to Briefing.com.


While the above-50 figure marks "a welcome return to expansion," according to ISM survey chair Steve Miller, he noted that respondents frequently referenced slow growth and economic uncertainty.

"Price increases impacting costs of operations were mentioned more frequently this month," Miller said in a statement.

"The most common topic among survey panelists continued to be concerns about impacts related to tariffs," he said.

Since returning to the presidency in January, Trump has imposed a sweeping 10 percent tariff on almost all US trading partners, along with higher duties on imports of steel, aluminum and autos.

His approach of unveiling, then adjusting tariff levels to allow for negotiations to take place have rocked financial markets and caused a surge in business worries.

"Increased cost from tariffs and the potential for tariffs is impacting cost increases," said a respondent in the agriculture sector.

Another respondent, in the construction industry, said sales remained "stubbornly low" as mortgage rates stayed elevated.

"Residential construction has embarked on cost-cutting measures through value engineering, supplier margin reductions and layoffs," the respondent said.

In June, ISM's business activity index picked up alongside new orders, but the employment index returned to contraction territory.