US service industry creeps toward growth as lockdowns ease, ISM report shows

Evelyn Hockstein/The Washington Post/Getty ImagesIl Canale restaurant is open for outdoor dining in Georgetown, Washington, DC, May 30, 2020.
  • The US service industry, easily the biggest component of the nation’s economy, slowed its decline and inched toward growth in May, according to the Institute for Supply Management’s latest report.
  • The organisation’s non-manufacturing index climbed to 45.4 in May from 41.8. Its new orders index rose 9 percentage points to 41.9, and an index for business activity gained 15 percentage points to 41.
  • While readings below 50 still represent industry contraction, the May report suggests service sectors are stabilizing alongside economic reopenings.
  • The Wednesday release follows ISM’s manufacturing report published Monday, which showed factory activity similarly stabilizing through the month.
  • Visit Business Insider’s homepage for more stories.

The biggest part of the US economy is slowly inching its way back to growth after plummeting amid coronavirus lockdowns.

The Institute for Supply Management announced Wednesday its non-manufacturing index climbed to 45.4 in May from 41.8. The organisation’s new orders index jumped 9 percentage points to 41.9, and its index for business activity gained 15 percentage points to 41.

Any reading below 50 represents contraction throughout the industry, while a reading above the threshold indicates growth. Despite its upward trend, May’s report ushered in the second month of service-industry shrinkage following a 122-month growth period.


Read more:
A $US40 billion wealth-management firm says the US economy is only 19% recovered from the pandemic – and lays out a winning investing strategy in the wake of a massive stock-market rally.

Of the 28 services sectors tracked by ISM, 14 reported a decrease in May, including the educational services, wholesale trade, and utilities sectors. The four reporting growth through the month were agriculture and forestry, finance and insurance, public administration, and information.

“Respondents remain concerned about the ongoing impact of the coronavirus. Additionally, many of the respondents’ respective companies are hoping and/or planning for a resumption of business,” Anthony Nieves, ISM’s Non-Manufacturing Business Survey Committee chair, said in the report.

Despite the broadly optimistic report, ISM’s index for service industry employment increased only 1.8 percentage points to 31.8. The reading signals lasting pain in business hiring through relaxed lockdowns. Friday’s jobs report will further detail May hiring trends and is expected to peg the unemployment rate at roughly 20%.

While the second quarter is expected to bear the brunt of the coronavirus’ economic toll, ISM’s latest reports suggest April may serve as the nation’s trough before recovering. A separate report from the organisation released Monday showed its manufacturing sector index gaining to 43.1 in May from 41.5, a similar turn higher from a sharp decline.


Now read more markets coverage from Markets Insider and Business Insider:



ZoomInfo is set to join the Nasdaq exchange, risking new confusion among investors trading other Zoom-named stocks



Dow soars 350 points as economic-reopening optimism continues to outweigh civil unrest



A proprietary Bank of America indicator points to 20%-plus gains in the stock market over the next year. Here’s what the firm recommends buying now ahead of the rally.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.