NEW YORK — The nation’s service sector shrank unexpectedly in June, according to a report released last week by the Institute of Supply Management (ISM), even as inflationary pressures soared to record highs.
ISM’s non-manufacturing index registered 48.2 in June, down from 51.7 during the month prior and a record low in the survey’s 11-year history. Economists had expected a survey reading of 51.0, Reuters says.
The service sector comprises about 80% of all U.S. economic activity, including banks, restaurants, hotels and drycleaners, and reading below 50 signals economic contraction, the association says.
With prices on the rise for food, fuel and most other products, the index may indicate that the economy is entering a low-growth/high-inflation phase known as stagflation.