-Michael Moran, an economist at Daiwa Capital Markets
Service industries in the U.S. grew at faster pace last month as an increase in orders indicated that businesses are confident demand will be rise after a slowdown in the second quarter. The Institute of Supply Management reported on Wednesday its non-manufacturing index rose to 53.7 in May compared to 53.1 in the preceding month. A reading above 50 signals expansion of the industry. Economists expected ISM non-manufacturing PMI to reach 53.4 in May.
Meanwhile, ADP data showed that U.S. companies are reluctant to increase payrolls amid federal budget cuts. Companies added 135,000 jobs in May on a seasonally adjusted basis compared to a April's figure, which was revised down to 113,000. The majority of newly created jobs came from services industry, which added 138,000 jobs, while goods producing industry cut 3,000 jobs last month. The reading was weaker-than-expected as analysts predicted payrolls to climb 165,000 last month.
Factory orders also disappointed investors as government spending cuts coupled with weak global demand put notable pressure on U.S. manufacturing sector. New factory orders climbed 1% in April, after plunging 4.7% in the preceding month, raising concerns about manufacturing slowdown of the world's largest economy. Experts projected the orders to advance 1.5%.
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