US services sector activity decelerates in May

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The US services sector slowed down in May.

Markit's Purchasing Managers' Index came in lower than expected, at 56.2.

Economists had forecast that the PMI was unchanged from the previous month at 56.4, according to Bloomberg.

In Markit's release, chief economist Chris Williamson wrote: "While the survey still supports the view that GDP growth looks set to recover after the 0.7% rate of decline seen in the first quarter, the softness of the data raises big question marks for policymakers over the strength of the rebound and whether the economy is losing momentum as it heads into the summer."

Additionally, ISM's non-manufacturing index fell to 55.7, the lowest reading since April 2014. Economists had expected it to come in at 57.0, down from 57.8 in the prior period.

Respondents in agriculture noted that the avian influenza (or bird flu) outbreak is "causing major issues for poultry farmers.

In a note to clients after the data, BNP Paribas' Bricklin Dwyer wrote: "Despite the negative headline, just one industry (mining) contracted in the month while 15 increased and the remaining two were unchanged. This is an improvement from April, when four industries reported a contraction."

"What’s worrying about this report is that the level of confidence on the non-manufacturing front has been outstripping the pace of personal consumption spending and today’s print suggests that we are getting a correction in confidence, rather than an upward adjustment in spending."

Here's the latest chart of Markit's index:

Screen Shot 2015 06 03 at 9.51.13 AM

(Markit Economics)

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