American business activity and sentiment improved in May but remain muted amid ongoing tariff turmoil.
That’s according to the S&P Global flash May composite index, released Thursday (May 22) and showing expectations for future output improving following the lows seen in April.
“However, they both remained historically subdued amid ongoing concerns over the detrimental impact of tariffs on demand, supply chains, and prices,” the S&P said in a news release.
“Export orders continued to fall, dropping especially sharply for services, supply chain delays intensified, and prices charged for goods and services surged to an extent not seen since August 2022, overwhelmingly linked to tariffs.”
At the same time, manufacturing input inventory holdings experienced the largest jump ever recorded as companies tried to guard themselves against future tariff-related issues.
And while manufacturing saw an easing in the sharp export decline from April reported in April, exports of services (including spending by foreigners in the U.S.) fell at the sharpest rate since the COVID lockdowns of early 2020.
In fact, aside from the pandemic, the dip in the export of services was the largest recorded since comparable data were first available in 2014, the S&P said.
Chris Williamson, chief business economist for S&P Global Market Intelligence, said that “at least some of the upturn in May can be linked to companies and their customers seeking to front-run further possible tariff-related issues, most notably the potential for future tariff hikes after the 90-day pause lapses in July.”
As PYMNTS wrote last week, the tariffs have led America’s mid-market companies to “hit reset” due to economic uncertainty.
Research from the May edition of the PYMNTS Intelligence 2025 Certainty Project, “Tariffs and Business Uncertainty: The Current State of Play,” found that more than half of the companies surveyed in goods-producing sectors anticipate negative impacts from tariffs, an increase from previous months.
This sentiment is fueled by expectations of supply chain disruptions, delayed product deliveries, and increasing raw material costs.
The pervasive and ongoing uncertainty is driving business decisions, with many companies delaying investments and hiring plans until trade policies become clearer. The first quarter of this year saw the American economy shrink by 0.3%, the first contraction since 2022, spotlighting the impact of trade tensions on economic performance.
“The rules that once delivered predictable growth — global outsourcing, just-in-time inventory and quarterly optimization — no longer guarantee success,” PYMNTS wrote. “Instead, agility, resilience and innovation are emerging as cornerstones of corporate survival.”
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