US ISM non-manufacturing falls short of estimates

Service sector activity in the US grew more slowly than expected in May, according to figures released on Friday.

The Institute for Supply Management’s Index of non-manufacturing activity fell to 52.9 in May from 55.7 in April, missing expectations for a reading of 55.2.

The non-manufacturing business activity index dropped to 55.1 from April’s 58.8.

The new orders index printed at 54.2 from 59.9, while the employment index declined to 49.7 from 53, indicating contraction after two consecutive months of growth.

“Overall, the report reflects a cooling-off and slowing in momentum from the previous months of growth for the non-manufacturing sector,” the ISM said.

Capital Economics said: “Following up on the sudden slump in payroll gains last month, the decline in the ISM non-manufacturing index is clearly disappointing.

“Overall, this survey will do little to reassure the Fed following the disappointing jobs report. Nevertheless, the strength of the incoming data in recent weeks – the big rebound in real consumption in particular, including the resilience of motor vehicle sales in May – still suggests that real GDP will rebound to between 2.5% and 3% annualized in the second quarter.”