Economic activity in the services sector grew in May for the 24th month in a row, with the Services PMI registering 55.9%, according to the latest Services ISM Report on Business from the Institute for Supply Management.

“In May, the Services PMI registered 55.9%, 1.2 percentage points lower than April’s reading of 57.1%,” Anthony Nieves, CPSM, CPM, APP, CFPM, chair of the services business survey committee for the ISM, said. “This is the lowest reading since February 2021, when the index also registered 55.9%. The Business Activity Index registered 54.5%, a decrease of 4.6 percentage points compared to the reading of 59.1% in April, and the New Orders Index figure of 57.6% is three percentage points higher than the April reading of 54.6%. The Supplier Deliveries Index registered 61.3%, 3.8 percentage points lower than the 65.1% reported in April.

“The Prices Index dropped from the all-time high of 84.6% in April, decreasing 2.5 percentage points to 82.1%. Services businesses continue to struggle to replenish inventories, as the Inventories Index grew, but at a slower rate. The reading of 51% is down 1.3 percentage points from April’s figure of 52.3%. The Inventory Sentiment Index (44.5%, down 2.2 percentage points from April’s reading of 46.7%) contracted in May for the third consecutive month, indicating that inventories are in ‘too low’ territory and insufficient for current business requirements.

“According to the Services PMI, 14 industries reported growth. The composite index indicated growth for the 24th consecutive month after a two-month contraction in April and May 2020. Growth continues — albeit slower — for the services sector, which has expanded for all but two of the last 148 months. The sector’s slowdown was due to a decline in business activity and slowing supplier deliveries. The Employment Index (50.2%) returned to expansion territory, and the Backlog of Orders Index grew, though at a slower rate. COVID-19 continues to disrupt the services sector, as well as the war in Ukraine. Labor is still a big issue, and prices continue to increase.”