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Non-manufacturing sector holding steady in expansion
The U.S. non-manufacturing sector expanded for the fifth straight month in May, matching the growth of March and April, and factory orders also rose, providing positive signs for job growth.
The index for the service industries sector, which makes up the bulk of the economy, held at 55.4 for the third straight month, according to figures released Thursday by the Institute for Supply Management (ISM). A reading greater than 50 signifies growth.
During the past three months the service sector has grown at its fastest pace since 2006 but it is still lagging behind the gains in manufacturing, which is growing faster than expected behind positive numbers in production, new orders and employment in May.
Factory orders rose 1.2 percent in April, according to the Commerce Department.
Although the non-manufacturing figure fell below expectations, some economists said the expansion of the service sector could signal job growth, which could in turn lead to increased consumer spending.ISM's employment index increased 0.9 percentage points to 50.4, reflecting growth for the first time after 28 consecutive months of contraction.
The May business activity index rose to 61.1 from 60.3, while the new orders index dropped to 1.1 percentage points to 57.1 in May from 58.2 in April, according to the ISM report.
Prices are still increasing but pressures eased in May, according to the report.
Factory orders for U.S. manufactured goods totaled $420.8 billion, slightly below economists' predictions. The Commerce report showed improved revised figures of 1.7 percent growth in March, up from a previously estimated 1.3 percent increase.
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