Growth in the U.S. services sector accelerated in May, rising at the fastest pace in nine months as new orders and business activity jumped, an industry report showed on Wednesday.
The Institute for Supply Management said its services sector index rose to 56.3 in May from 55.2 in April, topping expectations for a read of 55.5.
The report marks the 53rd straight month the index was above 50, the level that separates expansion from contraction, and was the latest sign economic activity is rebounding from the impact of the harsh winter.
The May figure was the highest since August's reading of 57.9, which had been a seven-year high.
The gauge of business activity surged to 62.1 from 60.9 in April. It was the highest read for the index since February 2011 and easily topped the consensus analyst forecast of 60.
The new orders index rose to 60.5, the highest level since January 2011, from 58.2 in April.
The employment index rose to 52.4 from 51.3 in April, while the prices paid index rose to 61.4, its highest since October 2012, from 60.8.
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Services sector expands at fastest rate in more than 2 years: Markit
The U.S. services sector expanded in May at its fastest rate since March 2012, an industry report showed on Wednesday, though the pace was revised down from a preliminary read on the month.
Financial data firm Markit said its final services Purchasing Managers Index was 58.1 in May, up from the April read of 55 but below the preliminary reading of 58.4.
A reading above 50 signals expansion in economic activity.
The services sector added employees at the fastest rate since January, with the employment subindex rising to 52.8 from 51.2, below the initial reading of 53.1. New business growth for the services sector was at its fastest since February 2011.
Markit's composite PMI, a weighted average of its manufacturing and services indexes, hit 58.4 in May, up solidly from April's read of 55.6. While the index was slightly under the preliminary May reading of 58.6, it was the highest since March 2012.
"The final PMI for May has come in slightly weaker than the earlier flash estimate but is yet another indication that business activity rebounded strongly in the second quarter," said Chris Williamson, chief economist at Markit.
"If growth persists at anything like this pace over the summer, talk will inevitably increasingly move to (the economy's) ability to cope with higher interest rates."