business activity in the us continued to gain pace in june for the fifth month in a row but at a slowing rate as goods producers saw declines after three months of growth the sp global flash composite output indexwhich gauges activity in the manufacturing and services sectorspulled back to 53 in june from 543 in may signaling the slowest upturn in output since march the indicator suggests that the privatesector economy expanded as it came in above the 50 nochange threshold manufacturers weighed on the overall expansion with factory production falling at the steepest rate since january the service sector meanwhile continued to see robust growth that cooled some since mays 13month high while improving supply conditions had helped boost manufacturing production in prior months an increasingly severe downturn in new orders mean factories are running out of work sp global chief business economist chris williamson said the situation is brighter in the service sector where demand is proving resilient and the recent pause in rate hikes appears to have helped boost business optimism for the year ahead the flash us services pmi decreased to 541 in june from 549 last month still above the 538 consensus forecast from economists polled by the wall street journal the reading the second highest since april 2022 reflects strong consumer confidence within the sector and new client acquisitions sp global said firms reported a stronger inclination by customer to spend and an uptick in client referrals new export orders also rose the us manufacturing pmi was 463 in june dropping from 484 in may instead of recovering to 49 as economists had been expecting operating conditions across the manufacturing sector deteriorated more severely in june than they have in any other month this year stemming from a reduction in new orders sp global said manufacturers recorded the fastest rate of contraction in new orders since december with weak demand linked to muted consumer confidence in that part of the economy firms noted that the drop in new orders came as clients stock levels stabilized while foreign client demand remained subdued sp global said the question remains whether the service sector will remain resilient in the face of manufacturing declines as well as the lagged effect of rate increases since further increases will dampen a sector already susceptible to changes in borrowing costs williamson said tightness in the labor market also remains a concern and upward wage pressure continues to drive up costs in the service sector though the recent pullback in overall selling price inflation for goods and services is encouraging williamson said