US Services Sector Activity and Prices Rise in May
The ISM services PMI rose to 54.5 in May as businesses increased inventories amid supply disruptions from Middle East conflicts. Input prices climbed to their highest level since 2022, likely keeping Federal Reserve officials in a cautious wait and see mode regarding interest rate changes.
The United States services sector expanded to 54.5 in May as businesses accelerated orders to replenish stocks. This reading surpassed the 53.8 forecast by Reuters economists and rose from 53.6 in April. Intensifying price pressures and inventory restocking indicate the largest segment of the economy remains resilient.
### Supply Constraints Drive Prices to Four-Year Highs The Institute for Supply Management (ISM) reported that prices paid by services businesses reached their highest level in nearly four years. Costs for petroleum-related products rose sharply, a shift from April when respondents did not mention these inputs. The three-month U.S.-backed war with Iran has disrupted commodity flows, impacting energy, aluminum, and fertilizers.