U.S. service sector reports second month of modest growth

The overall service sector grew in May, but business for transportation and warehousing service providers contracted.

By Staff -- Modern Materials Handling, 6/4/2008

The U.S. non-manufacturing sector expanded slightly in May, according to a report issued yesterday by the Institute of Supply Management (ISM).

The ISM’s non-manufacturing index (NMI) registered 51.7% last month, a drop from April’s reading of 52%, but still high enough to indicate some growth in the service sector. (An NMI of more than 50% represents expansion, while a reading under 50% represents contraction.)

According to the NMI, 13 service industries reported growth in May, while just four reported contraction. Those four industries were

• Transportation & Warehousing;
• Finance & Insurance;
• Management of Companies & Support Services; and
• Agriculture, Forestry, Fishing & Hunting.

The transportation/warehousing industry was also among the industries reporting a drop in employment last month.

All service industries reported an increase in prices paid last month. The Prices Index increased 4.9 percentage points to 77%, indicating a faster rate in price increases than in April.