U.S. Services Industry Expands in April Amid Soaring Price Pressures

The Institute for Supply Management reported Monday that the US services sector expanded faster in April 2025, with the Services Purchasing Managers’ Index climbing to 51.6 percent from 50.8 percent in March.

This unexpected increase defied economists’ forecasts, which had predicted a decline to 50.2 percent. Service sector growth continues for the tenth consecutive month despite significant trade policy upheaval.

The expansion coincides with the Trump administration’s implementation of sweeping new tariffs that began taking effect in early April. These include a general 10 percent tariff on nearly all imported goods and additional country-specific higher tariffs.

The New Orders Index jumped to 52.3 percent from March’s 50.4 percent. Employment remained in contraction but improved to 49 percent from 46.2 percent.

Supplier deliveries slowed further, with that index rising to 51.3 percent from 50.6 percent, typically indicating a strong economy but now reflecting supply chain disruptions.

Most notably, the Prices Paid Index surged to 65.1 percent, its highest level since January 2023. This sharp increase signals mounting inflation pressures directly tied to the new tariff regime.

Industry respondents specifically cited “actual pricing impacts” from tariffs rather than just uncertainty about future effects. Eleven service industries reported growth in April, led by Accommodation & Food Services, Wholesale Trade, and Mining.

Six sectors contracted, including Agriculture and Professional Services. Some businesses reported that federal agency budget cuts continue to hamper growth.

The April jobs report reinforced the economic resilience theme. Employers added 177,000 jobs, above economist expectations though slightly below March’s revised figure. The unemployment rate held steady at 4.2 percent.

Trading Economics forecasts the Services PMI to reach approximately 53.0 points by the end of the second quarter, suggesting continued moderate expansion despite headwinds from the new trade policies.