Service industries in the U.S. expanded at a faster pace in May as a pickup in orders showed companies are confident demand will be sustained after a second-quarter slowdown.
The Institute for Supply Management’s non-manufacturing index climbed to 53.7 from 53.1 in April, according to a report from the Tempe, Arizona-based group today. A reading above 50 indicates expansion in the industries that make up almost 90 percent of the economy. Other figures showed private payroll growth slowed last month.
The gain in services shows the expansion is weathering a downturn in manufacturing, propelled by a housing market rebound that is driving sales at companies such as Home Depot Inc. (HD) At the same time, federal budget cuts help explain why employers are reluctant to accelerate hiring and give the economy a bigger boost.