Nonmanufacturing Activity Suggests Slower U.S. Growth

By John S. McClenahen The U.S. economy continues to recover from the 2001 recession but at a slower rate than projected--or hoped--just a few months ago. The latest evidence came July 6, when the Tempe, Ariz.-based Institute for Supply Management (ISM) reported that its business activity index for the nonmanufacturing sector of the economy was at 59.9% in June, down 5.3 percentage points from Mays 65.2%. Tuesdays nonmanufacturing report followed by less than a week ISMs July 1 report that the rate of growth in U.S. manufacturing had slowed in June, down 1.7 percentage points to 61.1% in June from 62.8% in May. However, both manufacturing and nonmanufacturing grew last month, with their business activity indexes well above the 50% mark that separates general expansion from contraction. Among ISMs 17 nonmanufacturing groups, those reporting the highest rates of growth in June were transportation, utilities, agriculture, real estate and business services. Wholesale trade was the only one to report a contraction in business activity.

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