WASHINGTON (Reuters) - U.S. services sector activity accelerated in May, pointing to robust economic growth in the second quarter, but trade tariffs and a shortage of workers posed a threat to the outlook.
Other data on Tuesday showed job openings rising to a record high in April, far outpacing hiring. Strengthening economic growth and tightening labor market conditions likely seal the case for a Federal Reserve interest rate increase next week and raise the probability of two more hikes later in the year.
“Whatever speed the economy is growing at, it isn’t going to keep moving down the road much longer if there is no one to work the economy’s factories and stores and warehouse floors,” said Chris Rupkey, chief economist at MUFG in New York.
The Institute for Supply Management (ISM) said its non-manufacturing activity index jumped 1.8 points to 58.6, ending three straight monthly declines. A reading above 50 indicates expansion in the sector, which accounts for more than two-thirds of U.S. economic activity.
The ISM survey added to bullish data on consumer spending, the labor market, manufacturing and trade that have suggested the economy was regaining speed after slowing in the first quarter. Gross domestic product estimates for the second quarter are as high as a 4.8 percent annualized rate. The economy grew at a 2.2 percent pace in the January-March period.
The dollar .DXY was trading higher against a basket of currencies, while U.S. stocks were mixed. Prices for U.S. Treasuries rose.
