U.S. service providers indicated another strong rise in business activity and incoming new work during May, but both rates of expansion eased since the previous month. Nonetheless, survey respondents remain highly upbeat about their prospects for growth over the next 12 months, with the degree of business optimism rising to its strongest since November 2014.
This in turn contributed to a robust and accelerated increase in service sector payroll numbers in May. At 56.2 in May, the seasonally adjusted Markit U.S. Services Business Activity Index posted above the neutral 50.0 value for the nineteenth consecutive month. However, the latest reading was down from 57.4 in April and pointed to the slowest pace of expansion since the opening month of 2015.
Mirroring the trend for business activity, service providers signalled the least marked upturn in new work for four months in May. The seasonally adjusted final Markit U.S. Composite PMI™ Output Index (covering manufacturing and services) registered 56.0 in May, down from 57.0 in April but above the neutral 50.0 threshold for the nineteenth consecutive month. The latest reading indicated the slowest pace of output expansion since January.
