U.S. services firms expanded at a stronger pace in May compared to the prior month, as companies saw gains in business activity, new orders and employment.
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The Institute for Supply Management said Tuesday that its services index rose to 58.6, from 56.8 in April. Any reading above 50 signals growth. The services sector has expanded for 100 consecutive months, or more than eight years.
The gains are consistent with an economy that has steadily been expanding for nine years without many of the excesses that could risk a downturn. The index dovetails with the May jobs report released last week by the government that showed employers added 223,000 jobs as the unemployment rate fell to 3.8 percent from 3.9 percent.
The index is drawn from a survey of purchasing managers in the services industry, which includes finance, health care and retail and accounts for the majority of U.S. economic activity. The measure of employment picked up from April, although some of the firms interviewed by the survey said they're struggling to find qualified workers.
Of the services industries tracked in the survey, 14 reported growth and just one — the information sector — said its business was contracting.