The U.S. services sector extended its growth streak to 23 consecutive months in May, with the Institute for Supply Management's Services PMI® registering 54.5 percent — a 0.9-percentage-point gain over April's reading of 53.6 percent. The broadly watched benchmark covers a wide swath of the economy, including restaurants, hotels, and food service operators, making it a reliable pulse check for hospitality professionals tracking demand conditions.
The headline number was reinforced by an accelerating New Orders Index, which climbed to 57.3 percent in May — up 3.8 percentage points from April's 53.5 percent and sitting 2.6 percentage points above its 12-month average of 54.7 percent. For restaurant and hospitality operators, rising new orders typically translate to stronger near-term revenue pipelines, whether that means increased covers, catering contracts, or managed-services volume. The Business Activity Index also moved higher, gaining 1.8 percentage points to reach 57.7 percent.
The one persistent cloud in an otherwise optimistic report is labor. The Employment Index contracted for the third consecutive month, registering 47.9 percent in May — fractionally below April's 48.0 percent reading and the only one of the four composite subindexes sitting below its 12-month moving average. For an industry that has wrestled with chronic staffing challenges since the pandemic, a softening employment signal in an otherwise expanding services environment is a tension worth watching. Operators may be growing revenue while simultaneously pulling back on headcount additions, a dynamic that puts pressure on existing staff and service quality.
The Supplier Deliveries Index came in at 55.2 percent, indicating slower deliveries — a reading that can reflect either supply-chain friction or simply higher demand volume overwhelming distribution networks. Either way, food and beverage procurement teams should monitor lead times closely heading into the summer peak season, when beverage industry supply chains and food distribution networks traditionally face elevated strain.
ISM Services Business Survey Committee Chair Steve Miller, CPSM, CSCP, noted that the New Orders Index's current reading is tracking well above its longer-term average, suggesting the demand environment remains genuinely robust rather than just bouncing from a soft prior month. Covered by Food & Beverage Magazine and other trade outlets, the monthly ISM report is widely used by operators and investors to calibrate hiring, purchasing, and capital spending decisions in the months ahead.
Written by Michael Politz, Author of Guide to Restaurant Success: The Proven Process for Starting Any Restaurant Business From Scratch to Success (ISBN: 978-1-119-66896-1), Founder of Food & Beverage Magazine, the leading online magazine and resource in the industry. Designer of the Bluetooth logo and recognized in Entrepreneur Magazine's "Top 40 Under 40" for founding American Wholesale Floral, Politz is also the Co-founder of the Proof Awards and the CPG Awards and a partner in numerous consumer brands across the food and beverage sector.
