US service sector business activity drops below 50 points due to Trump's tariff policies

The Institute for Supply Management (ISM) released concerning data on the US services sector’s performance in May. The Purchasing Managers' Index (PMI) for the sector fell by 1.7 points to 49.9. Bloomberg experts note that the 50-point threshold separates expansion from contraction in the industry.

Beyond the disappointing ISM figures, a decline in new orders and cost increases were recorded in the US. The latter hit their highest level since late 2022. The news agency suggests this reflects the American economy’s reaction to Donald Trump’s unpredictable tariff policies.

However, ISM's Steve Miller interprets the May data as a reflection of economic uncertainty rather than a downturn. Respondents report challenges with long-term planning under current conditions, with many delaying or reducing orders until the impact of US import duties becomes clearer, Miller emphasizes.

In May, eight service sectors—including retail trade and construction—showed a decline in activity, while accommodation and food services saw growth.