The numbers: An ISM barometer of business conditions at service-oriented companies such as restaurants, hotels and retailers fell slightly to 55.3% in June and hit the lowest level in two years — yet another sign of a slowing U.S. economy.
Economists polled by The Wall Street Journal had forecast a reading of 54%.
Numbers over 50% are viewed as positive for the economy, but the index has fallen three months in a row. A similar ISM survey of American manufacturers also showed business slowing to a two-year low in June.
Big picture: The economy is decelerating because of high inflation, as the ISM surveys show.
The Federal Reserve is trying to tame the surge in prices by raising interest rates. A higher cost of borrowing usually slows the economy by making it more expensive to buy a house or a car or take out a business loan.
The more aggressive Fed strategy has also raised worries the central bank could drive the economy into recession.