Solid Economic Growth Indicated by Services Sector Acceleration

INDIANAPOLIS, INDIANA - APRIL 26: US President Donald Trump gestures to guests at the NRA-ILA Leadership Forum at the 148th NRA Annual Meetings & Exhibits on April 26, 2019 in Indianapolis, Indiana. The convention, which runs through Sunday, features more than 800 exhibitors and is expected to draw 80,000 guests. …
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The U.S. got some good economic news Wednesday morning.

The Institute for Supply Management said its nonmanufacturing index rose to 56.9 in May from 55.5 in April. The index tracks ec0nomic activity in the services sector, including entertainment, construction, finance, and health care.

That beat economists’ expectations and indicates an acceleration from April’s 55.5 reading. When the index is above 50, it indicates economic expansion in the services sector, the largest sector of the U.S. economy.

Employment was a strong point in the report, rising 4.4 points to 58.1. New orders rose, pointing to increased production in the second half of the year. Overall business activity also improved.  Sixteen of the 17 industries surveyed reported growth in the month.

The category of “Agriculture, Forestry, Fishing & Hunting” was the only one to report a decrease in activity, which could reflect China’s decision to retaliate against U.S. tariffs by halting orders of U.S. soybeans.

“The non-manufacturing sector continues to experience a slight uptick in business activity, but it is still leveling off overall. Respondents are mostly optimistic about overall business conditions, but concerns remain about tariffs and employment resources,” Anthony Nieves, chair of the institute’s Non-Manufacturing Business Survey Committee, said in a statement.

The apparent services expansion comes after some surveys of the manufacturing sector, including a report from the Institute for Supply Management on Monday, had indicated slowing growth.

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