Economic activity in the services sector contracted in May, the first time since June 2024, the Institute for Supply Management reported.
The Services PMI contracted slightly at 49.9%, below the 50% breakeven point for only the fourth time in 60 months since recovery from the coronavirus pandemic-induced recession began in June 2020.
The Services PMI 49.9% reading was 1.7 percentage points lower than the April figure of 51.6% percent. The Business Activity Index was ‘unchanged’ in May, registering 50%, 3.7 percentage points lower than the 53.7% percent recorded in April. This is the index’s first month out of expansion territory since May 2020.
The Prices Index registered 68.7% in May, a 3.6-percentage point increase from April’s reading of 65.1%; the index has elevated 7.8 percentage points in the last two months to reach its highest level since November 2022 (69.4%). This is the first time the index has recorded this high of a two-month increase since a 9.2-percentage point gain in February and March 2021. The May reading is also its sixth in a row above 60%.
The New Orders Index dropped into contraction territory in May, recording a reading of 46.4%, a decrease of 5.9 percentage points from the April figure of 52.3. The Employment Index returned to expansion after two months in contraction; the reading of 50.7% is 1.7 percentage points higher than the 49 percent recorded in April and is the second straight month-over-month gain.