Business activity growth in the U.S. service sector reached a three-month high in May, with the business activity index rising to 53.6 in May from 53.1 in April, according to the IHS Markit Purchasing Managers' Index.
The rate of new business growth accelerated from April to a four-month high, amid stronger demand from both new and current clients.
Meanwhile, the final seasonally adjusted composite PMI output index ticked up to 53.6 in May from 53.2 in April.
"Although service sector business activity picked up in May, the PMI surveys for manufacturing and services collectively indicate only a modest pace of economic growth so far in the second quarter," said Chris Williamson, chief business economist at IHS Markit. "However, the key message from the PMI is that the economy is enjoying steady, albeit unspectacular, growth, and that the pace of expansion has been slowly lifting higher in recent months."