The final value of the US April service sector PMI is lower than expected, tariffs leading to increased inflation and the risk of stagnation inflation.

According to data released by S&P Global, the final value of the U.S. April S&P Global Services PMI was 50.8, lower than the expected 51.2 and the previous value of 51.4. At the same time, the final value of the U.S. April S&P Global Composite PMI was 50.6, expected to be 51.2, with a previous value of 51.2. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said: "Although tariffs have dominated the headlines, the larger U.S. service sector is developing against a worrying backdrop. In April, business activity and hiring were close to stagnation amid a sharp drop in business confidence. Service providers for businesses and consumers, especially financial services companies, are reporting significantly weakened growth prospects, citing recent tariff announcements and ongoing federal spending cuts as exacerbating economic uncertainty." Williamson also stated: "A key area of weakness is the decline in service exports, which are currently falling at a pace not seen since 2012. Reports indicate that domestic demand is weakening as confidence declines. Rising import prices due to tariffs are pushing up costs for service sector businesses, leading to price increases, especially in consumer-facing industries such as restaurants and hotels. The result is a stagnation in service sector growth, with increased risks of rising inflation or stagflation."