U.S. services sector activity unexpectedly eases in January

Published 05/02/2025, 16:24
© Reuters.

Investing.com - U.S. services sector activity unexpectedly slowed in January, while the prices paid for inputs edged down, in a sign of some possible cooling in recent inflationary pressures.

The Institute for Supply Management’s non-manufacturing purchasing managers’ index came in at 52.8 last month, down from 54.0 in December. Economists had expected the figure to rise to 54.2.

Still, a PMI level above 50 denotes expansion in the key services sector, which makes up two-thirds of the U.S. economy.

Many firms flagged that poor weather conditions during the month had impacted business levels and production, ISM said, adding that companies also remained concerned over possible trade actions taken by the new Trump administration.

The numbers come after U.S. President Donald Trump postponed a move to slap 25% import tariffs on Mexico and Canada earlier this week, although a 10% levy on China was allowed to take effect. Beijing has responded with its own retaliatory tariffs, sparking fears over a renewed trade war between the world’s two largest economies.

Trump has also threatened to place tariffs on the European Union, saying the bloc has "taken advantage" of the U.S.

Against this backdrop of rising trade tensions, businesses have moved to assess their production and pricing strategies prior to the implementation of potentially damaging levies.

"[M]any panelists also mentioned preparations or concerns related to potential U.S. government tariff actions; however, there was little mention of current business impacts as a result,” said Steve Miller, Chair of the ISM Services Business Survey Committee, in a statement.

However, Miller noted that there was "little mention" of an impact on current business conditions as a result.

The ISM survey’s new orders gauge moved down to 51.3 from 54.4 in December and its business activity measure dropped to 54.5 from 58.0.

As demand showed indications of easing, cost of inputs also dropped, with the survey’s prices paid figure slipping to 60.4 from an almost two-year high of 64.4 in December.

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