"Momentum had been very strong in the services sector since the reopening process began, but the sector is clearly cooling down now," Thomas Simons, U.S. economist at Jefferies, wrote in a note.
The services sector is at the center of the battle against inflation, as services prices tend to be stickier and less responsive to rate hikes.
ISM services PMISome economists view the ISM services prices paid gauge as a good predictor of personal consumption expenditures (PCE) inflation.
Excluding the defense sector, orders were down 0.4%, and excluding transportation orders - where military orders again had the largest footprint - bookings were down 0.2%.
With consumer spending shifting more toward services, consumer goods orders slid for a third straight month to their lowest level since February 2022.
Persons:
Thomas Simons, Simons, Lucia Mutikani, Dan Burns, Chizu Nomiyama, Paul Simao
Organizations:
Federal, Institute for Supply Management, Reuters, PMI, ISM, Fed, Jefferies, U.S, Services, Commerce Department, Factory, Thomson
Locations:
U.S