A Higher Ground: U.S. Service Sector

The dominant U.S. service sector grew at its fastest rate in a year in May, beating market expectations for a slightly slower pace.

The Institute for Supply Management's ISM services index rose to 59.7 in May from 56.0 in April. The analyst had actually expected a slight decline of 55.3. Analysts believe this is a very strong number and a key piece of the recent strength seen in U.S. data.

The stock market did not respond to these strong numbers from the service sector. However the dollar did respond gaining some ground to euro. Also the bond prices weakened on signs of strong growth. The services sector represents about 80 percent of U.S. economic activity, including businesses such as restaurants, hotels, hair salons, banks and airlines.