The service industries that make up over 85 percent of the American economy continued to expand in May giving credence to the expectation of stronger economic growth in the second quarter.
The purchasing managers’ index dropped slightly to 56.9 from 57.5 in April, according to the Institute for Supply Management an industry organization. But the 57.2 average for April and May was above the 56.4 average of the first quarter indicating that service sector expansion had accelerated.
New orders fell to 57.7 in May from their more than 10-year high of 63.2 in April. Employment rose sharply to 57.8 from 51.4.
The U.S. economy grew at an anemic 1.1 percent annual rate in the first three months of the year. The Atlanta Fed’s GDPNow estimate for the second quarter is currently 3.4 percent.
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