US: Markit Services PMI rises to 70.4 (final) in May from 64.7 in April

• US Markit Services PMI posted new series high in May.
• US Dollar Index continues to push higher toward 90.50.

The business activity in the US service sector expanded at a record-setting pace in May with the Markit Services PMI climbing to a new series-high of 70.4 from 64.7 in April. This reading came in higher than the flash estimate and the market expectation of 70.1.

Meanwhile, the IHS Markit further reported that the Composite PMI improved to 68.7 from 63.5.

Commenting on the data, "the US economic recovery shifted up a gear in May, with output of the combined manufacturing and service sectors surging past all prior peaks by an impressive margin," said Chris Williamson, Chief Business Economist at IHS Markit.

"The survey’s price gauges have also climbed to unsurpassed levels, which will add to inflation worries," Williams added. "These unprecedented output and price growth rates will inevitably lead to speculation about an earlier than previously expected tapering of Fed policy."

Market reaction

The US Dollar Index extended its rally after this report and was last seen rising 0.6% on the day at 90.44.