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U.S. Service Sector Contracts Amid Rising Tariff Costs

6/5/2025

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Summary

Story summary

U.S. service sector activity contracted in May, with the Institute for Supply Management's index falling to 49.9.
This is the first contraction in nearly a year, attributed to weaker new orders and increased costs from tariffs.
The prices index rose to 68.7, signaling heightened inflationary pressures.
Employment activity expanded, with the employment index increasing to 50.7.
Tariff-related uncertainty is impacting business planning and demand.

History

Historical Context

The recent contraction in U.S. service sector activity echoes the economic turbulence of the early 2000s, when tariff uncertainties and inflation similarly impacted growth. Historical shifts toward a service-based economy have made it vulnerable to such fluctuations, revealing the lasting effects of past economic policies on current business dynamics.

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Story summary

U.S. service sector activity contracted in May, with the Institute for Supply Management's index falling to 49.9.
This is the first contraction in nearly a year, attributed to weaker new orders and increased costs from tariffs.
The prices index rose to 68.7, signaling heightened inflationary pressures.
Employment activity expanded, with the employment index increasing to 50.7.
Tariff-related uncertainty is impacting business planning and demand.

1 / 2