US, China Services Sectors Diverge Amid Tariffs

In April, China's services sector growth slowed sharply, with the Caixin Services PMI dropping to 50.7, its lowest in seven months, reflecting mounting economic pressures and the impact of US tariffs. Meanwhile, the US services sector showed renewed growth, with the ISM Services PMI rising to 51.6, surpassing expectations and reversing the prior month's slowdown. Growth in US services was driven by increased new orders and supplier deliveries, alongside a slight rebound in employment, though the employment index remained in contraction. US businesses reported the sharpest rise in input prices in over two years, mainly due to efforts to preempt new tariffs, contributing to inflation pressures. Supply chain strains and longer delivery times were also noted, highlighting the effects of ongoing trade tensions. Despite these challenges, US survey respondents remain more focused on current price changes than future risks, and the US economy shows no immediate signs of recession.