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ISM non-manufacturing index hits 56.9 in May, vs. 57 estimate

Everette Lange collects cleaned and pressed garments for a customer at Any Garment Cleaners in Aurora, Colorado.
Seth McConnell | The Denver Post | Getty Images
Everette Lange collects cleaned and pressed garments for a customer at Any Garment Cleaners in Aurora, Colorado.

Economic activity in the non-manufacturing sector grew in May for the 89th consecutive month, The Institute of Supply Management, or ISM, said on Monday.

The non-manufacturing index reached 56.9 for the month, falling slightly short of expectations. Economists polled by Thomson Reuters had forecast the index to fall slightly to 57 for the month of May.

"Although the non-manufacturing sector's growth rate dipped in May, the sector continues to reflect strength, buoyed by the strong rate of growth in the Employment Index," Anthony Nieves, chair of ISM, said in a statement.

"The majority of respondents' comments continue to indicate optimism about business conditions and the overall economy."

The index last hit 57.5 in April, up from 55.2 in March, ISM reported. This represented continued growth in the non-manufacturing sector at an even faster pace.

Seventeen non-manufacturing industries reported growth for the month, such as real estate, rental and leasing, construction and utilities, the group said.

"Seeing an uptick in the overall activity within the oil and gas sector, which typically will cause a trickle-down effect on the majority of businesses," a respondent from the mining industry told ISM.

The new orders index registered 57.7 percent for the month, 5.5 percentage points lower than its reading of 63.2 percent in April.

The employment index increased 6.4 percentage points in May, to 57.8 percent, from an April reading of 51.4 percent.

The prices index decreased 8.4 percentage points, from 57.6 percent in April, to 49.2 percent. This indicates prices dropped in May for the first time in 13 months.

A reading above 50 on these indices indicates expansion in the service sector, and a reading below 50 indicates contraction.