U.S. services sector expansion slowed for a third straight month in May, weakening alongside new business activity, an industry report showed on Wednesday.
Financial firm Markit said the “flash,” or preliminary, reading of its Purchasing Managers Index for the services sector slipped to 56.4 in May from a final reading of 57.4 in April.
A reading over 50 signals expansion in activity in the sector.
Markit’s May reading of new business fell to 55.8 from April’s final reading of 57.7, though a subindex on employment improved slightly.
Markit’s composite PMI, a weighted average of its manufacturing and services indexes, dropped to 56.1 from 57 last month. Last week, Markit’s flash reading of U.S. manufacturing showed activity slowed for a second straight month in May, though it remained in expansion territory.
“The rate of expansion remains below the buoyant rates seen throughout much of last year, as slower growth of service activity has been accompanied by a slowdown in the manufacturing sector, which has seen exporters hit by the stronger dollar,” Markit Chief Economist Chris Williamson said in a statement.
The Markit surveys suggest annual gross domestic product growth could accelerate to around 3 percent in the second quarter, while the economy adds around 200,000 jobs a month, Williamson said.