US service providers are recovering
The Purchasing Managers' Index for US service providers is back on track for growth at 53.8 points in May.
While US service providers exceeded the growth threshold of 50 points, US manufacturing fell to 48.7 points.
Photo: David Ryder/Bloomberg
After a small decline, US service providers managed to return to the growth zone. The Purchasing Managers' Index rose to 53.8 points in May, according to the Institute for Supply Management's (ISM) monthly survey released on Wednesday. This means that the growth threshold of 50 points has crossed, which it missed at 49.4 points in the previous month. Experts polled by Reuters had expected an increase of only 50.8 points in May.
U.S. manufacturing accelerated its decline surprisingly in May. The Purchasing Managers' Index fell 0.5 points to 48.7 points, as reported by the ISM earlier in the week. “America's growth hopes are back in the services sector,” said Ralf Runde, an economist at Landesbank Hessen-Thüringen. “The sector may be responsible for saving the US economy from recession after a disappointing performance in the ISM industrial survey.”
The US Federal Reserve is trying to control inflation without suffocating the economy with high interest rate policy. It will keep the key interest rate at 5.25 to 5.50%. Experts expect it will take months for interest rates to change due to stubbornly high inflation, while the European Central Bank (ECB) is expected to take an accommodative monetary policy as early as Thursday.
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