The U.S. services sector expanded at a slightly faster pace in May as the non-manufacturing business activity composite index was 53.7 in the month, compared to 53.1 in April, on a seasonally adjusted basis, the Institute for Supply Management reported Wednesday.

Economists polled by Thomson Reuters had expected a 53.5 level.

An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.

The prices paid index dipped to 51.1 from 51.2.

The employment index decreased to 50.1 from 52.0.

The business activity/production index gained to 56.5 from 55.0, the new orders index was at 56.0, up from 54.5; backlog of orders held at 51.5; new export orders fell to 50.0 from 53.5; inventories dropped to 51.5 from 56.0; inventory sentiment rose to 62.5 from 60.5; the supplier deliveries index increased to 52.0 from 51.0; and imports slid to 49.5 from 58.5.

Members' general comments on business in the month included:

"Sales remain slightly higher than the same period last year, but still below pre-recession sales figures." (Public Administration)

"The job order market slowed in April/May. We saw a slight increase in employment due to working down the order/inquiry backlog." (Professional, Scientific & Technical Services)

"Business seems to be improving through the second half of the year." (Information)

"Fairly stable the last month; overall optimistic going forward." (Accommodation & Food Services)

"The flat sequential sales - which began in January 2012 - are still continuing. At this point, we do not predict any lift in the foreseeable future. We do not see any negatives; it appears that business has reached its 'cruising altitude' and is staying there." (Wholesale Trade)

"Healthcare reform and sequestration are having a strong negative impact on business." (Health Care & Social Assistance)

"North America continues to improve at a modest rate. Europe is still a problem for global recovery." (Mining)

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