U.S. Service Activity Rebounds

By Joshua Kirby

The U.S. services industry rebounded in May, suggesting renewed dynamism in the key sector, according to survey data set out Wednesday.

The Institute for Supply Management's services-activity index surged to 53.8 from 49.4 in April, well above the slighter rebound expected by economists, according to a consensus compiled by The Wall Street Journal.

A reading above the no-change mark of 50 indicates expansion in the services sector. The survey in April pointed to shrinkage in the sector for the first time in close to 18 months, but May's recovery suggests that downturn has proven short-lived.

"The increase in the composite index ... is a result of notably higher business activity, faster new orders growth, slower supplier deliveries and despite the continued contraction in employment," said Anthony Nieves, chair of the ISM Services business-survey committee.

"Survey respondents indicated that overall business is increasing, with growth rates continuing to vary by company and industry," he said.

Production and new export orders surged more than any other components of the index, while supplier deliveries recovered to expansion and employment contracted at a slower rate.

Of particular interest to the Federal Reserve as it looks for signs that inflation is cooling, the prices index eased a little from a month earlier.

"The last month has brought a level of stability not seen is some time," said one survey respondent active in accommodation & food services.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

June 05, 2024 10:31 ET (14:31 GMT)

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