U.S. service sector slowing: ISM

An influential survey suggests the U.S. service sectorgrew more slowly in June, yet another sign the overall economycould weaken in the second half of 2010.

The Institute for Supply Management, a trade group of purchasing executives, says its index tracking service-oriented companies dipped to 53.8 last month from 55.4 in May.

A reading above 50 indicates expansion, so activity in the space is still expanding. But economists polled by Thomson Reuters were looking for a reading of 55 for the month.

"U.S. economic activity is slowing no debate there," BMO economist Jennifer Lee said."Slowing enough for a double-dip, though? Probably not."

It's the first time the ISM index has pulled back since November. That's a concern for economists, because a robust service sector whichaccounts for about 80 per cent of U.S. employment is crucial to keeping the economy growing and adding jobs.

"This is the latest in a series of economic indicators pointing to a slowdown in economic activity heading into the second half of 2010," TD economist James Marple said in a note.

The ISM survey also found that employers' plans to hire declined in June after growing in May for the first time in 28 months.