Economic Buzz: US private sector growth slows in May

The latest S&P Global PMI survey shows US private sector activity expanded only marginally in May, with rising fuel and energy costs weighing on growth. The headline US Services PMI Business Activity Index slipped to 50.7, down from 51.0 in April, signaling one of the weakest expansions in over two years. New business inflows supported activity, but sales growth remained below trend due to budget constraints and a sharp drop in international demand ? the steepest since November 2022.

Confidence fell to its lowest since October 2022, discouraging hiring. Service providers cut staff at the fastest pace since May 2020, while overall private sector employment dropped at the quickest rate in six years.

Cost pressures intensified, with input costs rising at the fastest pace in 2026 so far, driven by fuel, energy, labor, and tariffs. Firms raised selling prices at a slightly faster rate, though competitive pressures limited increases.

The US Composite PMI registered 51.5, down from 51.7 in April, reflecting modest growth. Manufacturing showed stronger expansion, but subdued services dragged overall momentum. Inflation strengthened to the highest in a year, keeping price pressures elevated across the private sector.

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