Growth slows in US service sector

The Institute for Supply Management's services index fell to 60 in May, down from 63 in April. Any figure above 50 represents growth in the sector.

Any change to the service sector is closely watched as it accounts for about 80% of US economic activity.

The sector ranges from businesses such as restaurants, hotels, bars, to hair salons, banks and airlines.

Last week, official data showed that the US economy created 75,000 jobs in May, considerably below expectations, and nearly half April's numbers.

US manufacturing output levels also dipped in May.

Rates quandary

The reduction in growth in the service sector could be the latest sign that the US economy is cooling.

Yet at the same time, US retailers saw May sales figures beat forecasts.

When all the latest data is taken together, the US Federal Reserve has much to consider before its next interest rate decision.

While the continued strength of oil prices might push the Fed towards another rate rise to combat any inflationary pressures, signs of a cooling economy could see rates remain on hold for the summer.

US interest rates are currently at a five-year high of 5%.

RELATED INTERNET LINKS:
Institute for Supply Management
The BBC is not responsible for the content of external internet sites