The US services sector experienced a slowdown in July, with activity levels dipping below expectations, news agency AFP reported on Tuesday, citing data from the Institute for Supply Management (ISM).
The report says that President Donald Trump’s tariffs and global trade tensions are key factors that impacted the growth of global industries this year.
Key takeaways from survey
The Institute for Supply Management (ISM) services index fell to 50.1 per cent in July, a slight decrease from 50.8 per cent in June. Although the figure remains above the 50 per cent mark, indicating growth, it missed the expected forecast of 51.5 per cent, the news report said.
“The Employment Index’s continued contraction and faster expansion of the Prices Index are worrisome developments,” ISM survey chair Steve Miller told AFP.
He further added that both the new exports and imports indexes moved from expansion to contraction territory, giving “signals that tariff tensions are impacting global trade”.
“The most common topic among survey panelists remained tariff-related impacts, with a noticeable increase in commodities listed as up in price,” Miller said.
The business activity index was in expansion but cooled from June’s reading, so did the new orders index. However, the employment index remained in the contraction territory for the second straight month, the news agency reported.
“Anticipation of the final tariff impacts is resulting in delayed planning for next fiscal year purchases,” said a respondent in the accommodation and food services sector.
Another respondent, in the agriculture industry, added that “higher tariffs are increasing the cost of imported feed ingredients and trace minerals for livestock and poultry feeds”.
Economic outlook
Carl Weinberg, chief economist at High Frequency Economics, commented that “a slowing trend in service sector output is a cause for concern.”
Weinberg said the report supported the view of a gradually slowing economy, though he noted that it did not yet warrant monetary easing.