The service sector activity in the United States has contracted for the first time in nearly a year, with demand sharply declining.

In the United States, the service sector activity fell into contraction territory for the first time in nearly a year last month, as demand sharply declined and prices rose at a faster pace due to the impact of increased tariffs on the overall economy. The Institute for Supply Management said on Wednesday that the services index fell 1.7 points in May to 49.9. A reading below 50 indicates contraction, and the latest data came in below the majority of economists' forecasts, with only two exceptions. New orders contracted the most, and the price index reached its highest level since the end of 2022, indicating a more pronounced impact of the U.S. tariffs on imports on demand and inflation.