NEW YORK – The U.S. services sector expanded at a faster pace in May as the non-manufacturing business activity composite index was 54.6 in the month, compared to 52.8 in April, on a seasonally adjusted basis, the Institute for Supply Management reported Friday.
Economists polled by Thomson Reuters had expected a 54.0 level.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.
The prices paid index, closely watched for signs of inflation, dipped to 69.6 from 70.1.
The employment index increased to 54.0 from 51.9.
The business activity/production index slid to 53.6 from 53.7, the new orders index was at 56.8, up from 52.7; backlog of orders dipped to 55.0 from 55.5; new export orders increased to 57.0 from 53.5; inventories fell to 55.0 from 55.5; inventory sentiment slid to 55.0 from 57.5; the supplier deliveries index grew to 54.0 from 53.0; and imports decreased to 50.5 from 57.0.
Members' general comments on business in the month included:
“Business is O.K. Fuel prices and truck availability are starting to be a negative force on our supply chain.” (Agriculture, Forestry, Fishing & Hunting)
“Business conditions are stabilized.” (Health Care & Social Assistance)
“First and second quarters of 2011 have been up 25 percent over 2010; however, we expect a slight slowdown over the summer months.” (Professional, Scientific & Technical Services)
“Uncertainty within commodity markets, especially fuel- and oil-based products, is putting pressure once again and forcing us to retrench as we look for stability. We expect the remainder of 2011 and at least the first two quarters of 2012 to be tumultuous.” (Retail Trade)
“Volatile commodity prices adding stress to meat and dairy producers; increasing fuel prices are a problem for many.” (Wholesale Trade)
