Service Sector Carves Fresh All-Time High in May, Beating Expectation

The services sector output hit a fresh all-time high in May as most businesses reopened after the COVID-19 pandemic, according to the Institute for Supply Management.

• The Services PMI grew 1.3 percentage points to 64% in May from 62.7% in April.
• The latest reading surpassed the previous record high of 63.7% recorded in March, after growing for 12 straight months.
• All 18 industries recorded growth indicating a strong expansion after firms reopened and boosted production capacity.
• Respondents attributed the growth to stimulus money, increased vaccinations, and eased lockdown restrictions.
• Several firms said they started to shift back to working in the corporate office on a limited basis.
• ISM Chair Anthony Nieves noted that downside risks remain such as capacity constraints, material shortages, weather-related delays, and challenges in logistics and employment.
• The Supplier Deliveries index climbed 4.3 percentage points to 70.4% from April’s 66.1%. A reading above 50% indicates slower deliveries.