US services PMI unexpectedly drops in May

Activity in the US services sector unexpectedly deteriorated in May, according to data released on Wednesday.

Markit’s flash US services purchasing managers’ index fell to 51.2 from 52.8 in April, missing expectations for a reading of 53.1.

Although it remained above the 50.0 mark that separates contraction from expansion, it was well below the long-run survey average of 55.6.

Chris Williamson, chief economist at Markit, said: “A deterioration in the survey data for May deal a blow to hopes that the US economy will rebound in the second quarter after the dismal start to the year. “Service sector growth has slowed in May to one of the weakest rates seen since 2009, and manufacturing is already in its steepest downturn since the recession.

“With no sign of any growth rebound and the labour market cooling, only one of the Fed’s three tests for a June rate hike – rising price pressures – is passed according to the PMI data.”