Economic activity in the US services sector expanded in May after contracting in April, the Institute for Supply Management announced today. April’s contraction represented the first pullback in business activity since December 2022. Still, employment challenges remain despite May’s uptick.
The ISM’s Services PMI measure of business activity rose to a reading of 53.8% in May from a reading of 49.4% in April. Readings above 50% indicate expansion.
“The increase in the composite index in May is a result of notably higher business activity, faster new orders growth, slower supplier deliveries and despite the continued contraction in employment,” Anthony Nieves, chair of the ISM’s Services Business Survey Committee, said in a press release.
Data for the ISM’s report comes from a survey purchasing and supply executives across the US. The Services PMI is a composite index based on the diffusion indexes of four indicators with equal weights: business activity, new orders, employment and supplier deliveries.
The employment index rose to reading of 47.1% in May from 45.9% in April, though readings below 50% reflect contraction. It the fifth time this index has contracted in six months.
“Employment challenges remain, primarily attributed to difficulties in backfilling positions and controlling labor expenses,” Nieves said.