The U.S. services sector expanded at a slower pace in May as the non-manufacturing business activity composite index was 52.9 in the month, compared to 55.7 in April, on a seasonally adjusted basis, the Institute for Supply Management reported Friday.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.
Economists polled by Thomson Reuters had expected a 55.0 level.
The prices paid index increased to 55.6 from 53.4.
The employment index fell to 49.7 from 53.0.
The business activity/production index declined to 55.1 from 58.8, the new orders index was at 54.2, down from 59.9; backlog of orders dipped to 50.0 from 51.5; new export orders decreased to 49.0 from 56.5; inventories held at 54.0; inventory sentiment declined to 60.0 from 61.0; the supplier deliveries index rose to 52.5 from 51.0; and imports decreased to 53.5 from 54.0.
Members' general comments on business in the month included:
- "Outlook remains strong, with steady pricing, strong demand, and new expansion in the pipeline." (Accommodation & Food Services)
- "Projects from the oil companies are becoming less and less. Budget problems for capital projects." (Construction)
- "There has been a general slowing-down from the momentum we saw last month." (Professional, Scientific & Technical Services)
- "Slower start to the second quarter." (Arts, Entertainment & Recreation)
- "Holding steady. No real increase, but expansion plans on for late Q3 or Q4 in preparation for 2017." (Finance & Insurance)
- "Continued growth in the sector." (Transportation & Warehousing)
- "Pending labor concerns to replace an aging workforce of highly-skilled staff support positions." (Educational Services)
- "High pressure on cost reduction due to declining top line sales." (Retail Trade)
- "Significant drop in shipments for the month. Estimate a decline of nine percent for the markets we serve. Overall retail traffic has slowed. Pricing has stabilized in the market." (Wholesale Trade)
