US business activity growth cools as tariff-related inflation kicks in
By Benjamin Chiou
Date: Monday 23 Jun 2025
(Sharecast News) - Private sector activity in the United States increased at a slightly slower rate in June as goods prices jumped, but growth still came in ahead of analysts' expectations.
The preliminary reading of the S&P Global composite purchasing managers' index (PMI) slipped to 52.8 this month, from 53.0 in May.
While the rate of expansion remains well below that seen late last year - the composite PMI ranged between 54 and 55 for the second half of 2024 - this was still the 29th straight month of readings above 50 , which separate growth from contraction.
The service-sector PMI eased to 53.1 from 53.7, while the manufacturing PMI held steady at 52, with both readings beating the consensus forecasts of 52.9 and 51, respectively.
According to S&P Global, falling exports of goods and services acted as a drag on growth in June, though this was partly offset by stock building by US companies due to tariff concerns.
Additional trade tariffs, which were implemented in April, were also widely blamed by purchasing managers on higher prices across both the manufacturing and services sectors. In particular, manufacturers' input prices and selling prices both posted their highest growth rates since July 2022.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said that the outlook "remains uncertain while inflationary pressures have risen sharply in the past two months".
He said that inflationary pressures and slower growth mean that the Fed is like to "remain on hold for some time to both gauge the economy's resilience and how long this current bout of inflation lasts for."
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