In April, US service sector business activity growth was the slowest in nearly a year-and-a-half, according to the latest PMI data from S&P Global. Uncertainty over federal policies, especially trade, was reported to have limited demand growth and weighed on business expectations, which slumped to its lowest level for two-and-a-half years.
Meanwhile, tariffs were reported by firms to have been a key driver of higher operating expenses through a rise in supplier charges. Service providers increased their own selling prices in response, with inflation the strongest since January.
The S&P Global US Services PMI Business Activity Index remained above the critical 50.0 no-change mark in April to signal an increase in service sector activity.
However, with the index dropping to 50.8, the lowest reading since November 2023 and down from 54.4, growth was marginal and much slower than March’s three-month high.
Slower activity growth was linked to similarly weaker gains in new work during April. Uncertainty around trade policy also hit the confidence of service providers in April.
Input costs continued to rise at an elevated pace during April, although the rate of inflation eased considerably from March’s one-and-a-half year high to its weakest of 2025 so far.
Despite evidence of slowing demand growth, service providers chose to increase their own selling prices to a stronger degree in April.
The S&P Global US Composite PMI fell to 50.6 in April, down from March’s 53.5 and its lowest level since September 2023. A rise in new work was also recorded, but to only a modest degree.
Amid uncertainty over trade policies, business expectations slumped to their lowest level for two-and-a-half years, whilst employment numbers were little changed.
On the price front, input cost inflation softened during April but remained relatively high as suppliers raised prices in response to tariffs. Panel firms responded by increasing their selling prices at the fastest rate since last September.