US Services Sector Remains Expanding, External Demand Weakens
US services sector activity remained in the expansion zone in January, with the S&P Global US Services PMI at 53.8—signaling continued growth in the services economy, although the pace is not yet rapid. A reading above 50 signifies expansion, extending a long-standing growth trend.
The main driver comes from still-solid domestic demand. However, external factors are acting as a brake: demand from foreign clients is weakening, and surveys show a sharp decline in exports—in line with increasingly tough trade conditions amid tariff issues and countervailing responses.
Regarding employment, service companies are still hiring, but the increase is slight—more of an “additional addition” due to stable capacity demand, rather than an explosion of activity. This aligns with signs that the labor market has begun to gradually slow down at the beginning of the year.
On the price side, cost pressures have not disappeared. Surveys highlight that input inflation remains high, with import tariffs still frequently cited as a cost-pushing factor. However, the increase in selling prices to customers appears to be more limited—meaning some businesses appear to be holding back on passing the full cost on to consumers.
Looking ahead, it's worth noting that business confidence has fallen to its lowest level in three months. So, even though the PMI is still expanding, the mood among businesses is becoming more cautious—a combination of still-high costs, policy uncertainty, and weakening external demand.
Source: Newsmaker.id
