Slight expansion of U.S. service companies seen in May

U.S. service companies, which employ roughly 90% of the workforce, expanded at a slightly faster pace in May, marking the 29th straight month of expansion. The Institute for Supply Management reports this morning that its index of non-manufacturing activity edged up to 53.7 last month from an April reading of 53.5. The May reading was slightly below the long-run average for the index of 53.9. A reading above 50 indicates expansion. The ISM survey covers all sectors outside of manufacturing, including retail, construction, financial services, health care and hotels. The ISM’s manufacturing index, released last week, showed that manufacturing grew more slowly in May, hampered by weak hiring and declining production. Nevertheless, new manufacturing orders hit a 13-month high—a hopeful sign. The service sector includes low-paying positions in retail and restaurants; but it also has higher-paying jobs in professions such as information technology, accounting and financial services. The ISM’s service index reached the highest point in 12 months in February, when its reading was 57.3.