US services growth slows to weakest level since 2016: ISM

Cement is laid on the San Joaquin River viaduct portion of the high-speed rail line being built in Fresno, California, on May 8, 2019, amid ongoing construction of the railway in California’s Central and San Joaquin Valleys.

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Growth in the U.S. services sectors decelerated in July to its weakest level in three years as trade worries weighed on business orders and the outlook for the overall economy, a private survey released on Monday showed.

The Institute for Supply Management (ISM) said its non-manufacturing activity index fell to 53.7 from 55.1 the month before. Analysts polled by Reuters had forecast a reading of 55.5 for July.

A reading above 50 indicates expansion in the sector.

Slower growth in the services sector, which accounts for more than two-thirds of U.S. economic activity, comes at a time that the U.S.-China trade war has been squeezing manufacturers.

“For an economy that is so heavily dependent on the service sector, this is a particularly troubling release,” Ian Lyngen, head of U.S. interest rates strategy at BMO Capital Markets wrote in a research note.

The ISM services survey’s measure on new orders fell to 54.1 last month, its lowest since August 2016, from 55.8.

A barometer on new export orders fell to 53.5 from 55.5 in June.

The latest reading on services prices fell to 56.5 from 58.9.

A lone bright spot was an uptick in the employment index, which moved up to 56.2 from 55.0.

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