Growth in U.S. service sector activity slowed by much more than expected in the month of May, according to a report released by the Institute for Supply Management on Friday.
The ISM said its non-manufacturing index fell by 2.8 points to 52.9 in May after climbing by 1.2 points to 55.7 in April.
While a reading above 50 continues to indicate growth in the service sector, economists had expected the index to show a more modest drop to 55.5.
Anthony Nieves, chair of the ISM Non-Manufacturing Business Survey Committee, said, "Respondents' comments are mixed and vary by industry and company."
"Overall, the report reflects a cooling-off and slowing in momentum from the previous months of growth for the non-manufacturing sector," he added.
The bigger than expected decrease by the headline index came as the new orders tumbled to 54.2 in May from 59.9 in April and the business activity slumped to 55.1 from 58.8.
The employment index also slid to 49.7 in May from 53.0 in April, indicating a pullback in service sector employment after two months of growth.
On the other hand, the report said the prices index climbed to 55.6 in May from 53.4 in April, suggesting prices rose for the second straight month.
The ISM released a separate report on Wednesday that unexpectedly showed an uptick in the pace of growth in manufacturing activity in May.
The report said the purchasing managers index rose to 51.3 in May from 50.8 in April, with a reading above 50 indicating growth in the manufacturing sector.
The modest increase came as a surprise to economists, who had expected the index to edge down to a reading of 50.6.
by RTT Staff Writer
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