(Bloomberg, May 05) — US business activity slowed to a low point of 4 months in the early part of May. Rising costs and rising selling prices had tempered consumer demand for service providers. 

The S&P Global (NYSE:) flash May composite purchasing managers index slipped 2.2 points to 53.8, the group reported Tuesday. A reading above 50 indicates growth. While the measure of input price rose slightly to the highest data point back to 2009 (the record for April), output price growth has slowed.

The group’s gauge of new business at service providers fell to the lowest level since August 2020, indicating some customers are beginning to balk at higher prices. Despite rising costs for business, wages and fuel costs, they continue to rise.

“Companies report that demand is coming under pressure from concerns over the cost of living, higher interest rates and a broader economic slowdown,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

The euro area saw services expand at a steady pace while manufacturing growth slowed for the fourth month. While services activity was buoyed by tourism and recreation, factories were hampered by supply problems related to Russia’s invasion and Covid lockdowns in China.

While at a still-robust 57.5, the S&P Global index of US manufacturing settled back to a three-month low in May. New orders decreased and the pace of production growth slowed.

The persistent logistic challenges caused order backlogs to grow. Manufacturer output prices rose at the third fastest rate in data since 2007, but it has improved slightly from April.

In the meantime, factory employment rose to its highest point since July.

“Manufacturers in particular also report that capacity continues to be constrained by supply shortages, though these bottlenecks showed further encouraging signs of easing,” Williamson said.

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