US services PMI rose in April as companies ramp up purchases ahead of new tariffs

In April, the Institute for Supply Management’s (ISM) US Services Purchasing Managers’ Index (PMI) rose to 51.6, up from 50.8 in March. Economists polled by Reuters had expected a decline to 50.2. The increase was partly driven by active purchases of goods by American businesses and households ahead of anticipated new trade tariffs by the US administration.

According to Oxford Economics analysts, the services sector will grow faster than manufacturing in the second quarter. However, this expansion will likely be accompanied by rising prices and a decline in consumer spending.

Meanwhile, an ISM survey reveals that service sector businesses are expressing concerns about the impact of President Donald Trump's trade policies on rising product costs, as well as potential significant cuts in federal spending.

Small business representatives report that import tariffs are negatively impacting their operations, as many companies source goods from China. The situation worsened after Trump increased tariffs on Chinese imports to 145%. Reuters notes that this move has escalated trade tensions between Beijing and Washington.