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Service sector grew at slower pace in May
NEW YORK — The service sector grew at a better-than-expected pace in May but slower than in April, suggesting that higher prices for food and fuel may be crimping business in retail, entertainment and agriculture.
The Institute for Supply Management said Wednesday that its service sector index was 51.7 in May, following a stronger-than-expected reading of 52 for April. Wall Street economists surveyed by Thomson Financial/IFR had expected a reading of 50.3 in May.
A reading above 50 indicates the sector, which comprises roughly 80 percent of the total economy, is growing, while a reading below 50 indicates contraction.
Still, the sector’s expansion, albeit modest, could provide a glimmer of hope that the U.S. economic slowdown will be mild, analysts said.
"It’s somewhat of a mixed report," said Bernard Baumohl, executive director, The Economic Outlook Group. "This tells us, that even if we’re in recession — something I’m not ruling out — it’s a very shallow one."