Service Industry’s Growth Weakens

WASHINGTON — Restaurants, hotels, retailers and financial companies saw more business in July, but the broader U.S. service industry experienced its weakest growth in 17 months.

The report Wednesday from the Institute for Supply Management confirms other data that show the economy is struggling two years after the recession ended.

The trade group of purchasing executives said its index for services companies fell to 52.7, from 53.3 in June. Any reading above 50 indicates expansion.

The ISM’s index covers a range of service industries, including health care, retail, and financial services. The index reached a five-year high of 59.7 in February, but has fallen since then. The July reading was the lowest since February 2010.

Separately, the Commerce Department said businesses cut orders for airplanes, autos and heavy machinery in June. Factory orders dropped 0.8 percent, the second drop in three months.


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New orders, an indication of future business, increased but at the slowest pace since August 2009, just after the recession ended.

The report “suggests that the economy is not slipping into a recession but instead that growth is very weak,” said Paul Dales, an economist at Capital Economics.

Economic growth slowed to less than 1 percent in the first six months of this year, the government said Friday. Consumer spending, which fuels 70 percent of economic activity, fell in June for the first time since September 2009.


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