US Services Sector Growth Picks Up in April Amid Inflation Concerns

The U.S. services sector showed renewed growth in April, with the Institute for Supply Management (ISM) reporting its services PMI rising to 51.6 from 50.8 in March, signaling expansion and beating expectations of a slowdown. Increased new orders and supplier deliveries contributed to the uptick, while the employment index, though still contracting, showed signs of improvement. Despite this growth, input prices rose sharply to a more than two-year high, driven in part by businesses and households trying to get ahead of tariffs, fueling inflation pressures. Supply chain bottlenecks emerged as firms rushed to avoid higher costs due to new tariffs, leading to longer supplier delivery times. While some economists caution that the effects of tariffs on inflation and employment may become more pronounced over the summer, industry respondents are currently more focused on actual price increases than on uncertain future impacts. Overall, the data suggests that the services sector is holding steady and even regaining momentum despite persistent trade and cost headwinds.