WASHINGTON — Growth in the massive US services sector picked up momentum in May amid improved optimism about the economy, a closely watched purchasing managers survey showed Tuesday.
The Institute for Supply Management's services index rose to 53.7 percent from 53.5 percent in April, indicating a slightly faster growth rate in the nonmanufacturing sector that accounts for about 70 percent of the world's biggest economy.
"The majority of the respondents' comments are positive and optimistic about business conditions and the direction of the economy," said Anthony Nieves, chair of the ISM services survey committee.
Expectations were for the ISM services index to decline to 53.1 percent.
The ISM subindex for business activity climbed a full percentage point to 55.6 percent, and the new orders subindex jumped two points to 55.5 percent.
Two components fell. Employment growth slowed sharply to just above the break-even 50 percent reading between growth and contraction.
Prices fell month-over-month for the first time since July 2009, plunging almost four points to 49.8 percent in May.
"This is a mixed report on non-manufacturing activity, but one that on balance suggests the economy continued to expand and that any slowdown in business conditions might prove to be short-lived," said RDQ Economics analysts.
On Friday, the ISM reported growth in the US manufacturing sector slowed in May as the pace of production dropped on falling prices and slower orders.