Business activity growth in the U.S. private sector reached a three-month high in May as service-sector output expanded at a faster pace compared to April, initial estimates from IHS Markit showed.
The seasonally adjusted IHS Markit flash U.S. composite output index rose to 55.7 in May from 54.9 in April. A reading above 50 indicates expansion.
The flash services business activity index rose to 55.7, from 54.6 in April, and the flash manufacturing purchasing managers' index edged up to 56.6 from 56.5. The flash manufacturing output index, however, fell to 55.8 from 56.6.
"A faster rise in service sector output was the key factor behind the acceleration in overall business activity," IHS Markit said.
"Another strong upturn in new business volumes helped to boost output growth in May," IHS added. "Survey respondents commented on resilient domestic demand and a supportive economic backdrop."
However, IHS noted higher operating expenses across the private sector in May, with average input prices increasing at the fastest pace since July 2013.
Chris Williamson, IHS Markit chief business economist, said the latest survey data points to economic growth of 2.5% to 3%, with monthly job gains of more than 200,000.
Business optimism remains at a three-year high, according to IHS, as companies expect higher demand in the months ahead.
