The latest data from the Institute for Supply Management (ISM) has offered a small respite to the United States' otherwise slowing economy with a spike in activity in the country's services sector. The increase that was observed last month indicated a spike in newly hired workers offering the economy a temporary boost.
The ISM data revealed a spike in non-manufacturing activity, with a rise of 1.4 points to 56.9 for the month of May. This indicated expansion in the sector, which is significant as it counts for more than two-thirds of the economy's activity.
Employment in the services industry had increased by as much as 4.4 points; its highest point in over seven months. While the report indicated a mostly optimistic outlook for business conditions, some concerns over tariffs and employment resources still remained.
The report revealed growth for 16 major industries, which include real estate, finance, insurance, information, social assistance, and healthcare. Meanwhile, four industries had reported declines, namely in agriculture, fishing, forestry, and hunting. Major stock on equities markets was trading fairly higher following the release of the report.
A separate report released by the ADP National Employment Report revealed a slightly different story. Data from the report showed that employment in the goods-producing sector had only increased by 43,000 jobs in May, the lowest number in nearly two years.
Meanwhile, employment in the manufacturing sectors had dropped by 3,000. The report did coincide with ISM data, as indicated by the 71,000 new jobs added in the services sector last month. Most of the new jobs that were added were in the professional, health services, and education sectors.
The good news was preceded by data that showed a slowing US economy worsened by weak consumer spending and a decline in manufacturing. The previous reports suggest a loss of momentum in the country's economic growth, which may affect the outcome for the second quarter.
This may, of course, be exacerbated by Trump's ongoing trade war with China and his now brewing trade war with Mexico.
Economists have postulated that if the trade wars with Mexico and China continue, the Federal Reserve may be forced to cut interest rates for the year. The country's central bank announced this week that it would be closely monitoring the ongoing trade negotiations and that they are conducting a study to determine the possible economic ramifications.
Fed Chairman Jerome Powell stated that the agency would act appropriately in order to sustain expansion. The Federal Reserve released a separate report on Wednesday, which indicated that businesses were still concerned over tariffs.
