US service companies expanded in May

Associated Press

WASHINGTON

U.S. service companies, which employ roughly 90 percent of the work force, grew at a slightly faster pace in May. It marked their 29th-straight month of expansion.

The Institute for Supply Management said Tuesday that its index of nonmanufacturing 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 new-orders component of the index rose, suggesting that demand will be solid in coming months. But there was concern that the employment component, though still signaling expansion, slipped to the lowest reading since November.

Jennifer Lee, senior economist at BMO Capital Markets, noted that only 13 of 18 industries reported growth in May. That was the smallest total since the number stood at 12 in January.

But she said it was a relief that the economy’s nonmanufacturing sector “didn’t take as much of a hit” as manufacturing did this spring.