US Services Growth Cools in June but Jobs Stage a Comeback
Service sector expansion slowed last month, but a hiring rebound offers a silver lining for the broader economy.
The US service sector kept growing in June, but the pace pulled back — and that's the kind of mixed signal that can mess with your trading thesis fast. Expansion is still expansion, but slower momentum in services, which drives the bulk of the American economy, isn't something you ignore.
The real headline buried in this data is the employment component. After contracting for multiple months straight, services hiring finally flipped positive. That matters. A services jobs market that was shedding workers is now adding them, and that shifts the narrative on labor market resilience heading into the second half of the year.
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For traders watching the Fed, this data cuts both ways. Slower services growth could be read as the economy cooling under rate pressure — exactly what policymakers want to see. But the employment rebound muddies that picture. Strong hiring in services keeps consumer spending power intact, which in turn keeps inflation stickier than the doves would like.
Bottom line: don't let the headline slowdown fool you into thinking the services economy is rolling over. One month of softer growth against a backdrop of revived hiring looks more like a pause than a breakdown. Watch next month's read closely — if employment holds and growth stabilizes, the soft-landing crowd gets a fresh data point in their favor.
Continue reading at Reuters
