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US services see slowing pace of decline in June

US SERVICE industries contracted in June at a slower pace than expected according to data published yesterday by the Institute for Supply Management (ISM), recording 47.0 in June, a rise of three points from May.<br /><br />The ISM non-manufacturing survey is now at a level consistent with a very modest expansion in GDP of roughly 0.5 per cent at an annualised pace, as Paul Ashworth at Capital Economics points out.<br /><br />While it remained below the 50 mark that separates expansion from contraction, there was a particularly encouraging expansion in business activity, which rose to 49.8, new orders which jumped to 48.6, and a growth in new export orders.<br /><br />However, ING&rsquo;s James Knightley said that most of the distress is focused in the household sector and there are question marks over how sustainable the improvements in the ISM surveys will be and whether they can stay above the 50 break-even level.