As in the manufacturing sector, the growth rate of the non-manufacturing sector of the U.S. economy slowed in May, according to data released June 5 by the Institute for Supply Management (ISM), Tempe, Ariz. Its business activity index for non-manufacturing, which includes mining, construction, business services, and finance and banking, slipped to 60.1% last month from 63% in April, a 2.9 percentage point decline.
A figure above 50% indicates that the non-manufacturing sector generally is growing; a figure below 50% signals contraction.
Notably new orders among non-manufacturers fell five percentage points in May, to 59.6%, further evidence that while the overall U.S. economy is still growing, it's not at the torrid pace of the first quarter of 2006.
Inflation remains a concern among U.S. non-manufacturers. "Price increases have again become a significant area of concern for many [ISM] members as a result of raw material and fuel price increases," said Anthony Nieves, the chair of ISM's non-manufacturing business survey committee and senior vice president for supply management at Hilton Hotels Corp. The price component of ISM non-manufacturing business activity index soared seven percentage points in May to 77.5%, its highest monthly mark since September 2005.