U.S. ISM services PMI drops slightly more than expected in May

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Investing.com - Service sector activity in the U.S. fell slightly more than expected in May, underlining concern over the American economy, industry data showed on Wednesday.

In a report, the Institute of Supply Management (ISM) said its non-manufacturing purchasing manager's index (PMI) dropped to 56.9 in May from the prior month's reading of 57.5.

Analysts had expected the index to decline to only 57.0 last month.

On the index, a reading above 50.0 indicates the non-manufacturing sector economy is generally expanding, below 50.0 indicates the sector is contracting.

The Non-Manufacturing Business Activity Index decreased to 60.7 last month, 1.7 points lower than April's reading of 62.4. Analysts had forecast it to fall to 61.8.

The New Orders Index registered 57.7 in May, 5.5 points lower than the reading of 63.2 in the previous month.

The Employment Index increased 6.4 points to 57.8 last month from April's reading of 51.4.

The Prices Index decreased 8.4 points to 49.2 in May from the prior month's reading of 57.6.

Despite the fact that that general index dipped, it was the 89th consecutive month of expansion.

"The sector continues to reflect strength, buoyed by the strong rate of growth in the Employment Index," the ISM said in the release.

"The majority of respondents' comments continue to indicate optimism about business conditions and the overall economy," the report added.

Following the report, which was released simultaneously with April factory orders, EUR/USD traded at 1.1245 compared to 1.1248 before the release, GBP/USD was at 1.2926 from 1. 2936 earlier, while USD/JPY was at 110.51 from 110.55 prior to the publication.

The U.S. dollar index, which tracks the greenback against a basket of six major rivals, traded at 96.81 compared to 96.80 prior to the release.

Meanwhile, U.S. stock markets were trading flat after the open. The Dow 30 edged forward 0.03%, the S&P 500 dropped 0.03%, while the Nasdaq Composite slipped 0.01%.

Elsewhere, in the commodities market, gold futures traded at $1,283.54 a troy ounce, compared to $1,283.16 ahead of the data, while crude oil traded at $47.27 a barrel from $47.02 earlier.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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