Service Industries Grow at Fastest Pace Since August
Service industries expanded in May at the fastest pace in nine months as orders picked up, indicating improving sales will help the U.S. economy strengthen.
The Institute for Supply Management’s nonmanufacturing index climbed to 56.3 from 55.2 in April, the Tempe, Arizona-based group said.
Readings greater than 50 signal expansion. The median forecast of economists in a Bloomberg News survey called for 55.5. The gauge of orders reached a more than three-year high.
The third straight gain in the services measure shows demand is strengthening as companies add workers and rising stock and home prices give consumers the wherewithal to keep spending. The advance, along with the fastest pace of manufacturing this year, points to a second-quarter rebound in the economy.
“It suggests the strong momentum we saw the past few months is being sustained to carry growth from Q2 into the second half of the year,” said Millan Mulraine, deputy head of U.S. research and strategy at TD Securities USA.
The index has averaged 54 this year compared with 54.7 in 2013.
The ISM services survey covers an array of industries, including utilities, retailing, health care and finance, that make up almost 90 percent of the economy. It also factors in construction and agriculture. Seventeen of 18 service industries reported growth in May, according to the ISM report.
