ISM Services Survey Shows Faster Expansion; S&P Data Indicate Growth Deceleration

01:25 PM EDT, 06/03/2026 (MT Newswires) -- The US services sector saw continued expansion in May, with Institute for Supply Management data showing a faster growth rate sequentially, but S&P Global (SPGI) pointing to a deceleration.

The ISM's purchasing managers' index rose to 54.5 last month from 53.6 in April. The consensus was for a 53.8 print in a survey compiled by Bloomberg. A reading above 50 indicates the services sector economy is generally expanding.

The business activity index rose to 57.7 in May from 55.9 the month before, while the gauge for new orders increased to 57.3 from 53.5. The employment measure ticked lower to 47.9 from 48 and remained in contraction for a third consecutive month, the ISM survey showed.

"Respondents commented frequently that their companies had instituted hiring freezes or were not backfilling vacated positions, however, most industries reported that they were holding flat in employment month over month," Steve Miller, chair of the ISM's services business survey committee, said.

The price index increased to 71.3 last month from 70.7 in April, marking its highest level since August 2022, according to the ISM survey.

"The combination of resilient demand and intensifying cost pressures reinforces the risk of ongoing price pass-through, suggesting that the (Federal Reserve) is likely to remain patient on policy easing given limited progress on services disinflation and increasing the likelihood of rate hikes this year," TD Economics Senior Economist Vikram Rai said in a note.

Separately, S&P Global (SPGI) said its services PMI gauge fell to 50.7 in May from 51 the month prior, describing the latest expansion as "among the weakest" in the last 2.5 years. The impact of increasing prices, especially for fuel and energy, "stunted" growth in new business intakes, the data provider said. Employment fell at its fastest pace in six years, while business optimism reached the lowest since October 2022, the report showed.

Consumer-facing sectors were the hit the hardest, with corresponding orders falling at the steepest pace since the coronavirus pandemic in 2020, S&P Global Market Intelligence Chief Business Economist Chris Williamson said.

"The increase in input cost inflation being signaled by the PMI points to a further rise in consumer price inflation in the coming months, but on the other hand the weakening of demand growth and downturn in the labor market being indicated could help allay concerns over any inflation spike becoming more entrenched," Williamson said.

On Monday, separate surveys by the ISM and S&P showed that the US manufacturing sector expanded to its highest level in four years in May amid strength in demand and production, though price pressures remained elevated.

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