Service Sector Begins To Climb Back From Coronavirus and Shutdown Crash

A bartender cleans the counter at a bar in Austin, Texas on Friday, May 22, 2020. - Austin allowed bingo halls, bars and bowling alleys to reopen on Friday May 22. (Photo by Sergio Flores / AFP) (Photo by SERGIO FLORES/AFP via Getty Images)
Photo by SERGIO FLORES/AFP via Getty Images

The U.S. services sector rebounded more than expected in May from April’s steep decline.

The sector shrank for a second consecutive month in May, according to the monthly survey of non-manufacturing businesses conducted by the Institute for Supply Management. But the pace of the contraction slowed from the prior month.

The Institute for Supply Management said Wednesday that its service sector index rose to 45.4 last month, up from an April reading of 41.8.

Economists had forecast a rise to 44.0.

Any reading below 50 signals that the service sector is in contraction. Readings above that level signal expansion. The April plunge ended a  more than 10 year long streak of expansion in the services sector. The services sector is responsible for most of the employment in the U.S.

The May reading likely indicates rising demand as states and cities began to reopen their economies last month.

The continued contraction in service industries followed a similar pattern in the industrial sector. The ISM reported earlier this week that manufacturing activity remained in contraction territory in May, with a reading of 43.1, up slightly after registering 41.5 in April.

–The Associated Press contributed to this report.

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