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U.S. Services Sector Rebounds in May as New Orders Accelerate

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Luzi Ann Santos wrote a column · Jun 5 09:41
U.S. economic activity in the services sector expanded in May, while new orders accelerated, highlighting the sector's continued strength at a time when manufacturing is weakening.
The Services Purchasing Managers' Index (PMI) rose to 53.8% in May after contracting in April, the ISM said in a report Wednesday morning. That's stronger than the 51% average of estimates compiled by Bloomberg.
The services sector's price index fell 1.1 percentage point to 58.1% in May, from 59.2% in April as inventories grew for a second straight month, the Institute for Supply Management said in a report.
“The increase in the composite index in May is a result of notably higher business activity, faster new orders growth, slower supplier deliveries and despite the continued contraction in employment," Anthony Nieves, chair of the ISM services business survey committee said in the report. "The majority of respondents indicate that inflation and the current interest rates are an impediment to improving business conditions.”
The ISM services data came just hours after the ADP payrolls report that showed private employment rose in May at the slowest pace since January. Yesterday, the ISM released data showing manufacturing PMI shrank for a second month, with new orders dropping deeper into contraction.

Private companies added 152,000 jobs in May, according to the ADP national employment report released Tuesday morning. That's smaller than the 175,000 jobs expected in a Bloomberg survey. Payroll gains in April were revised lower to 188,000 from 192,000.
Pay gains for those switching jobs slowed for a second month to 7.8%, while raises for those who stayed held steady at 5% for a third month.
The latest payrolls data adds to signs of weakening labor market. On Tuesday, the Bureau of Labor Statistics released a report showing job vacancies dropped by 1.8 million jobs to 8.1 million in April, the lowest in two years.
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