Services Sector Contracts for First Time Since June 2024

Note: This section contains information in English only.
Source: Dukascopy Bank SA
In May 2025, the U.S. services sector experienced its first contraction since June 2024, with the Services PMI® slipping to 49.9 percent. This slight decline from April's 51.6 percent suggests increased economic uncertainty rather than a sharp downturn. The Business Activity Index held steady at 50 percent, showing flat output, while the New Orders Index dropped into contraction at 46.4 percent, pointing to weakening demand. On a positive note, the Employment Index rose to 50.7 percent, signaling modest job growth after two months of decline.

Supplier delivery times continued to lengthen, with the Supplier Deliveries Index rising to 52.5 percent, reflecting slower delivery performance typical of demand growth. However, inflationary pressure resurfaced, with the Prices Index jumping to 68.7 percent—its highest reading since November 2022—largely due to tariff impacts. Inventories dipped back into contraction territory at 49.7 percent, but inventory sentiment rose sharply to 62.9 percent, indicating businesses feel overstocked. The Backlog of Orders Index fell to 43.4 percent, the lowest since August 2023, showing a continued decline in pending work.



Ten of the 18 industries reported growth in May, down from eleven the previous month. While the three-month average PMI still indicates expansion, the recent dip reflects growing caution among businesses. Tariff-driven cost increases and supply chain uncertainties are making it harder for companies to plan ahead, prompting many to delay purchasing decisions. Overall, May's report highlights a services sector facing headwinds from rising prices, trade policy uncertainty, and softening demand.
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Wed, 11 Jun 2025 14:57:09 GMT

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