The Institute for Supply Management (ISM) reported on Thursday that its non-manufacturing index (NMI) came in at 64.0 in May, which was 1.3 percentage points higher than the unrevised April reading of 62.7 percent. This was the highest reading on the record and pointed to the growth in the services sector for the 12th straight month.

Economists forecast the index to increase to 63.0 last month. A reading above 50 signals expansion, while a reading below 50 indicates contraction.

All 18 services industries reported gains last month, as businesses reopened and production capacity increased, the ISM said, even though some capacity constraints, material shortages, weather-related delays, and challenges in logistics and employment resources continued.

According to the report, the ISM’s non-manufacturing Production measure climbed 3.5 percentage points to 66.2 percent from the April reading, while its New Orders gauge rose 0.7 percentage point to 63.9 percent, the Supplier Deliveries index jumped 4.3 percentage points to 70.4 percent and the Inventories indicator increased 2.4 percentage points to 51.5 percent. Meanwhile, the Employment indicator fell 3.5 percentage points to 55.3 percent. Elsewhere, the Prices index went up 3.8 percentage points to 80.6 percent, indicating that prices increased in May, and at a faster rate. This was the index's highest reading since July 2008.

Commenting on the data, the Chair of the ISM Services Business Survey Committee, Anthony Nieves, noted, “The past relationship between the Services PMI and the overall economy indicates that the Services PM for May (64 percent) corresponds to a 5.2-percent increase in real gross domestic product (GDP) on an annualized basis.”