
The Institute for Supply Management (ISM) reported that the US Services Purchasing Managers' Index (PMI) surged to 53.8 in May, surpassing market expectations of 50.8. This robust increase from April's 49.4 indicates a notable expansion in business activity within the US service sector.
The report revealed positive growth across various indicators. Notably, the Prices Paid Index, representing inflation, slightly decreased to 58.1 from 59.2, while the Employment Index improved to 47.1 from 45.9, albeit still showing a contraction in employment.
Anthony Nieves, Chair of the ISM Services Business Survey Committee, highlighted the reasons behind the PMI surge. He pointed out increased business activity, faster growth in new orders, and slower supplier deliveries as contributing factors. However, Nieves also noted ongoing employment challenges, citing difficulties in filling positions and managing labor expenses.
Market reaction to the upbeat PMI data was evident in the US Dollar Index, which climbed from session lows to reach 104.35, marking a 0.2% increase on the day. This reaction reflects investor optimism following the strong performance of the service sector, despite lingering concerns about inflation and prevailing interest rates.
The May ISM Services PMI underscores the resilience of the US economy and provides insights into the ongoing dynamics within the service sector. As businesses navigate through challenges such as labor shortages and inflationary pressures, the positive momentum in business activity offers a glimpse of optimism for continued economic recovery.
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