The enormous US services sector returned to solid growth in June, according to a survey, with a closely watched gauge posting its biggest rise since records began.
It is the latest sign that the world’s biggest economy was on its way back to normality in June from coronavirus lockdowns. However, a surge of new coronavirus cases across the country has thrown the recovery into doubt.
The Institute for Supply Management’s (ISM) non-manufacturing purchasing managers’ index (PMI) jumped to 57.1 in June from 45.4 in May.
It was the biggest surge the survey began in 1997 and well above the 50.1 reading analysts had predicted.
ISM chair Anthony Nieves said firms are “cautiously optimistic about business conditions and the economy as businesses are beginning to reopen”.
Yet he added: “Respondents remain concerned about the coronavirus and the more recent civil unrest,” referencing the Black Lives Matter protests.
Various pieces of economic data have suggested the US economy is picking up steam. Notably, employment figures have far outstripped expectations.
But the number of coronavirus cases in the US continues to surge, defying the trends seen in western Europe.
States such as Florida and Texas have rowed back on their moves to reopen. Economists fear new lockdowns could again damage the economy just as it was healing.
Nonetheless, respondents to the ISM survey reported business activity picking up markedly between May and June. Meanwhile, new orders also rose significantly.
One survey respondent in the agriculture, forestry, fishing and hunting sub-sector said there had been a “surprising recovery to sales volume over the past four weeks”.
Yet another company in the real estate, rental and leasing sub-sector told ISM: “Covid-19 and the riots have disrupted the normal flow of business. There is no new normal yet.”