Tough times for waiters: Services sector slammed after awful June

Tough times for waiters: Services sector slammed after awful June

Despite a continually growing economy, the service industry hasn't been doing well as of late.

For the third straight month, the U.S. services sector has had a difficult month with June’s results in as employment and output growth in the industry has slowed.

A new industry report released by financial firm Markit today describing its final reading of the Purchasing Managers Index finds that the services sector dipped to 54.8 in June — still an expansion as it is above 50, but a much smaller one than had been hoped for, according to a Reuters report.

The employment component of the service index dropped from 55.5 in May to 54.1 in June — the previous reading had been the highest level since last June.

The composite PMI that includes a weighted average of both manufacturing and services stood at 54.6, which was in lien with the preliminary reading and was also a drop from 56.0 in May. A recent read on manufacturing activity indicated that growth dipped to its lowest since all the way back in October 2013.

That means that while the industry is still growing, the surveys are suggesting a large slowdown in economic expansion in both the manufacturing and service sector since the start of the quarter. It could have some significant ripple effects: the growth of the Gross Domestic Product (GDP) could decline in the third quarter and that could cause hiring to be reduced as well.

It’s a rather worrying trend after economists had been reassured by strong growth in the economy lately, prompting speculation that the Federal Reserve would move to increase the interest rate later this year. This slowdown probably isn’t big enough to change that, but economists will be keeping their eyes on the economy in the coming months to see if this slowdown is more permanent.

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