Significant Divergence in Service Industry Data

The final value of the S&P Global Services PMI at 53.7 indicates that the service industry overall remains in an expansionary range, above expectations.

However, the ISM Non-Manufacturing PMI has fallen to 49.9, below the neutral line of 50, indicating a contraction in another sample of service businesses.

The inventory index has decreased to 49.7, showing that companies are beginning to actively reduce inventories, reflecting concerns about future demand.

This indicates that while large enterprises or the financial technology services sector are performing well, traditional service industries such as retail, dining, and logistics are facing pressure.

It may also be that small businesses are the first to feel the impact of weakened demand and rising costs.

Companies are passing cost pressures onto consumers.

A survey by the New York Fed shows that about 75% of manufacturing and service businesses have partially passed on tariff costs.

Among them, about one-third of manufacturing firms and 45% of service businesses have fully passed on tariff costs to customers.

This indicates that when faced with rising upstream input costs, companies choose to raise prices to maintain profits.

It also means that consumers are directly bearing the consequences of policy friction, contributing to the stickiness of service-related inflation.