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Markit Economics released its preliminary services purchasing managers' index (PMI) for the U.S. on Wednesday. The U.S. preliminary services purchasing managers' index (PMI) dropped to 51.2 in May from 52.8 in April.
A reading below 50 indicates contraction of activity, a reading above 50 indicates expansion.
The decline was driven by subdued client demand and less favourable domestic economic conditions.
Job creation slowed to the weakest level since December 2014, while business optimism slid to the lowest level since October 2009.
"A deterioration in the survey data for May deal a blow to hopes that the US economy will rebound in the second quarter after the dismal start to the year," Markit Chief Economist Chris Williamson said.
"Service sector growth has slowed in May to one of the weakest rates seen since 2009, and manufacturing is already in its steepest downturn since the recession," he added.
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