05.06.201822:02:00UTC+00U.S. Services Sector Activity Growth Accelerates in May

Expansion of activity in the U.S. services sector sped up in May, indicating a strong economic growth in the second quarter. However, trade tariffs and limited workers posed a risk to the robust outlook.

The Institute for Supply Management said its non-manufacturing activity surged 1.8 points to 58.6, snapping three consecutive monthly declines. The reading above the 50 mark also indicated expansion in the sector, which represents more than two-thirds of the U.S. GDP.

The reading of the survey piled into bullish data on consumer spending, the jobs market, manufacturing and trade that have indicated the economy was regaining momentum after a slump in the first quarter. Gross domestic product projections for the second quarter are as high as 4.8 percent annualized rate. In the January-March period, the economy expanded at a 2.2 percent rate.

The survey said that while service industries were upbeat regarding business conditions and the general outlook for the economy, there are lingering concerns regarding the uncertainty surrounding tariffs, trade deals and the effect on costs of goods sold.

In March, the Trump administration announced tariffs for steel and aluminum imports to protect local industries from what it claims to be unfair competition from foreign producers. Last week, the government extended the hefty duties to steel and aluminum imports from Canada, Mexico, and the European Union.

Other data released on Tuesday showed job openings climbing to a record high in April, significantly outstriping hiring. The Labor Department's monthly Job Openings and Labor Turnover Survey, or JOLTS report showing job openings, a measure of labor demand, increased by 65,000 to a seasonally adjusted 6.7 million in April. That was the highest level on record.