U.S. Services Sector Contracts in May 2025, ISM Reports – Coincu

The U.S. services sector experienced its first contraction since June 2024, with ISM reporting a PMI of 49.9 for May 2025.

This contraction increases concerns about the economic slowdown amid persistent inflationary pressures and rising input costs.

U.S. Services PMI Contracts to 49.9 in May

The Institute for Supply Management (ISM) reported a significant contraction in the U.S. services sector for May 2025. The Services PMI, recorded at 49.9, highlights declining business activity and a drop in new orders, marking the first such contraction since June 2024.

Expected ripple effects include increased cost pressures as the input price index for services rose to 68.7, its highest since November 2022. Businesses attempt to pass on these increased costs to consumers, potentially exacerbating inflation.

“The New Orders Index dropped into contraction territory in May, recording a reading of 46.4 percent, a decrease of 5.9 percentage points from the April figure of 52.3 percent,” said Steve Miller, Chair, ISM Services Business Survey Committee.

Ripple Effects and Market Observations Amid Rising Costs

Did you know? Historical ISM Services PMI contractions, such as those in 2024 and during the 2020 pandemic, often correlate with sharp risk-off sentiments in global financial markets, impacting risk assets like cryptocurrencies.

Bitcoin (BTC) is trading at $104,701.27 with a market capitalization of $2.08 trillion according to CoinMarketCap data. The digital currency’s price fell by 1.03% over 24 hours, recording 8.93% lower trading volume. Over 60 days, the price increased by 26.34%.

Insights from Coincu research team suggest prolonged inflation could lead to tighter monetary policies. Historical trends reveal that crypto market sentiment closely follows U.S. economic signals, potentially affecting market liquidity and investor behavior.