US Business Activity Moderates in June as Tariff-Driven Price Pressures Rise

U.S. business activity continued to expand in June 2025 but at a slightly slower pace, with the S&P Global Composite PMI falling marginally to 52.8 from 53.0 in May, marking the 29th consecutive month of growth. Manufacturing remained steady at 52.0, its highest level in over a year, while the services sector saw a modest decline to 53.1. Despite this growth, price pressures surged to their highest level since 2022, driven largely by President Donald Trump's aggressive tariffs on approximately 70% of U.S. imports, contributing to rising input and selling prices across sectors. Although inflation has remained relatively tame with consumer prices rising only 2.4% year-over-year in May, economists expect an acceleration in inflation during the latter half of 2025 as businesses begin passing on the higher costs. Some companies are absorbing tariff-related costs or shifting suppliers to mitigate price increases, which has limited the inflationary impact so far. The overall economic outlook remains uncertain amid these inflationary pressures, slowing export momentum, and cautious business sentiment despite continued hiring and order backlogs in manufacturing.