According to Jinshi, the U.S. service sector resumed growth in May after a brief contraction in April, and the business activity index recorded its largest increase in three years, which may support the Fed's cautious attitude towards interest rate cuts. The Institute for Supply Management (ISM) said that the non-manufacturing PMI rose to 53.8 from 49.4 in April, the highest since August last year.
The business activity index surged 10.3 points, the biggest gain since March 2021, to 61.2, the highest level since November 2022. New order growth accelerated again after slowing in the first two months, while the service input cost index fell. The employment index was 47.1, still in the contraction range.
The stronger-than-expected services data contrasted with the ISM manufacturing report, which showed factory activity contracted for a second straight month in May. The unexpectedly strong performance in the services sector in May could make policymakers more hesitant about cutting interest rates.