US ISM non-manufacturing index likely to have recovered in June

The US ISM non-manufacturing index is likely to have recovered in June, following a decline in May. According to a Societe Generale research report, the ISM non-manufacturing index might have risen to 54.4 in June after dropping to 52.9 in May.

Regional service sector surveys have proved mixed signals for June. For instance, revenue in the Richmond Fed’s services survey dropped to zero in June from 11 in May. However, employers continue to hire workers as that index continued to stay at 18.

Hiring in retail, surprisingly, rose sharply to 31 in June after dropping from 26 in March to -1 in April and -3 in May. June’s figure is the highest since records started in 1993, noted Societe Generale. In the mean time, the Dallas Fed’s services revenue index rose to 15.6 in June from May’s 5.8, the highest reading in almost one year.

Further, with the real spending expected to surpass annualized 4 percent in the second quarter, services activity is likely to have risen given the solid rate of expenditures.

The employment index was lower than 50 at 49.7 in May. A rebound in this indicator might augur well for the upcoming employment report, added Societe Generale.