U.S. Business Growth Holds Steady as Inflation Remains Tame Despite Tariffs
The latest S&P Global data shows US business activity is still growing, even if the pace has slowed slightly. In June, the US Composite PMI stood at 52.8, down from 53.0 in May, but still well above the 50 mark that signals expansion.
This means American businesses, across both manufacturing and services, continue to grow. Despite some concerns, the numbers do not indicate an economic downturn.
Manufacturing remains solid. The manufacturing PMI held at 52, matching the highest level in over a year. Factories are making more goods, and manufacturers are hiring.
Many companies are increasing their inventories, preparing for possible supply issues and higher costs linked to new tariffs on imports. Tariffs have increased sharply in 2025, now affecting about 70 percent of all US imports.
The average effective tariff rate has climbed to its highest level since the 1930s. Although economists expected these tariffs to push prices much higher, the actual impact on inflation has been smaller than predicted.
According to the Bureau of Labor Statistics, consumer prices rose just 2.4 percent in May compared to a year earlier, after a 2.3 percent annual increase in April.
This marks two consecutive months of slowing inflation, a trend not seen for some time. Month-to-month, prices rose only 0.1 percent in May, less than expected.
While tariffs have raised costs for some goods, especially clothing and shoes, many businesses have not passed these costs fully to consumers. Some companies have chosen to absorb part of the higher costs, and others have shifted to alternative suppliers.
As a result, the feared surge in inflation has not materialized. Energy prices have even fallen, helping to offset some of the increases elsewhere. The housing market is also changing.
There are nearly 23 percent more homes for sale than a year ago, giving buyers more options. However, high mortgage rates and prices still make it hard for many people to buy.
Looking ahead, official forecasts from the Federal Reserve and OECD expect the US economy to keep growing, but at a slower pace. The job market may cool slightly, but there are no signs of a major downturn.
The real story is clear: US business activity remains steady, inflation has eased for two straight months, and the economy is not experiencing the sharp price increases many feared.
While tariffs have created challenges, their impact on overall inflation has been limited so far. The US economy continues to show resilience, with growth and price stability holding firm.
This article was produced by The Rio Times’ automated AI newsroom. Editorial responsibility: Matthias Camenzind, Publisher and Editor-in-Chief. The Rio Times also runs Ask Rio Times, which answers from 100,000+ of our own articles, the daily Latin America Power Map, and prediction-market odds on elections and markets.. How we use AI · Report an error