In April 2025, the U.S. services sector continued to expand for ten straight months, with price pressures reaching a two-year high.

Taiwan • Business • 05/05 17:01
In April 2025, the U.S. services sector continued to expand for ten straight months, with price pressures reaching a two-year high.

In April 2025, U.S. service sector activity continued to expand, with the ISM Services PMI rising to 51.6, marking the tenth consecutive month above the expansion threshold. However, there was an increase in price pressures, with the ISM Price Index reaching 65.1, the highest since January 2023. Supply bottlenecks, policy uncertainty, and import tariffs have driven up business costs, affecting economic activity and inflation metrics.

Key Updates

05/06 18:32

Lofler, Administrator of the U.S. Small Business Administration, states that small businesses support Trump's tariff policy and challenge negative media reports.

At the "Small Business Week" event in Washington, D.C., Kelly Loeffler, the Administrator of the U.S. Small Business Administration, stated that the mainstream media's criticism of Trump's tariff policies is at odds with the support from small businesses. She is advocating for the "American Manufacturing Financing Act" to increase loan limits to bolster the manufacturing sector and help businesses restructure their supply chains to lessen dependence on China. Loeffler highlighted the confidence that small businesses have in Trump's policies and pointed out a surge in loan applications, which indicates that businesses are preparing to expand.

05/06 14:01

The EU plans to impose tariffs worth 100 billion euros on US goods: The risk of trade negotiations breaking down intensifies

On May 6, 2025, the European Union plans to impose retaliation tariffs on approximately 100 billion euros worth of U.S. goods as a precautionary measure to prevent potential breakdowns in trade negotiations. This action will add to the current tariffs on 21 billion euros of U.S. goods and may also extend to restrictions on services and export controls. The EU has expressed concerns about the U.S. expanding tariffs and investigations and has begun internal consultations to prepare for a comprehensive counteraction. Since negotiations began in April, progress has been slow. The EU is seeking substantial concessions but is not ruling out any options.

05/06 13:02

In April, China's port shipments rose by 7% and air transport surged by 30%. Despite the trade war, exports are still expected to grow.

Despite the escalating US-China trade war, with the US imposing tariffs as high as 145% on Chinese goods, China's trade logistics data for April shows resilience. According to data from China's Ministry of Transport, for the week ending April 27, ports across the country handled 6.7 million TEUs, an increase of 7% compared to the previous year; the number of international air cargo flights rose by 30% compared to the previous year. Bloomberg predicts a 2.5% increase in exports for April compared to the previous year, indicating strong performance despite high tariffs. The reduction in cargo ships on US-China routes highlights the pressure on exports to the US, and the Chinese government and businesses are adjusting their export strategies to tackle these challenges.

05/05 22:31

Carvana is Actively Acquiring Used Cars: Change in Strategy Due to Supply and Demand Imbalance in the U.S. Car Market

In the context of the imbalance between supply and demand and soaring prices in the U.S. used car market, Carvana is actively purchasing vehicles from consumers to cope with tariffs and supply shortages. The company has adopted a profit-oriented strategy and is responding to the demand for high-quality used cars. Although Carvana offers convenient options for selling cars, in a seller's market, holding onto or carefully selling a car might be more advantageous.

05/05 21:01

At the Milken Global Conference, U.S. Senior Officials Confront Trade Uncertainty Stemming from Trump's New Tariff Policy.

On May 5, 2025, the 28th annual Milken Institute Global Conference was held in Beverly Hills, California, where senior leaders from the finance, technology, and government sectors discussed the trade uncertainties triggered by the new tariff policies introduced by Trump. U.S. Treasury Secretary Scott Besant stated that tariffs are crucial for reviving investment and manufacturing, but business leaders, such as Citigroup CEO Jane Fraser, noted that while a 10% tariff is manageable, the uncertainty is what hinders investment. The U.S. has imposed tariffs of up to 245% on Chinese goods, impacting the global economy, leading to a contraction in Asian manufacturing and a decline in UK exports.

05/05 17:01

In April 2025, the U.S. services sector continued to expand for ten straight months, with price pressures reaching a two-year high.

In April 2025, U.S. service sector activity continued to expand, with the ISM Services PMI rising to 51.6, marking the tenth consecutive month above the expansion threshold. However, there was an increase in price pressures, with the ISM Price Index reaching 65.1, the highest since January 2023. Supply bottlenecks, policy uncertainty, and import tariffs have driven up business costs, affecting economic activity and inflation metrics.

05/05 17:01

Citigroup CEO Jane Fraser: Companies can handle a 10% tariff, but investment and hiring are still cautious

On May 5th, 2025, Citigroup CEO Jane Fraser said at the Milken Institute Global Conference in Los Angeles that most corporate clients can handle a 10% tariff imposed by the United States on trade partners, but a 25% tariff is challenging. Companies are generally postponing capital expenditures and hiring, waiting for the economic outlook to clear up. She pointed out that tariffs might affect supply chains and prices, and companies are bolstering their balance sheets and tweaking supply chain strategies to deal with the uncertainty.

05/05 15:03

The United States has temporarily suspended a 46% tariff on Vietnam, with the first round of negotiations on May 7 focusing on trade fairness.

The United States originally planned to impose a 46% tariff on Vietnamese goods starting April 9, but after various negotiations, the measure has been delayed by 90 days. Vietnamese Prime Minister Pham Minh Chinh confirmed on May 5 that the two sides will hold the first round of tariff talks on May 7, with a focus on safeguarding Vietnam's interests and advancing fair trade. Vietnam has sent a technical team to the U.S. and developed strategies to mitigate the tariff impact, supporting businesses and workers.

05/05 14:01

Temu's Response to Changes in U.S. Tariff Policies: Halts Direct Shipping from China, Shifts Focus to U.S. Warehouses and Local Sellers

Faced with the U.S. terminating the "small package tax exemption" policy and increasing import tariffs on Chinese goods, Chinese e-commerce platform Temu has stopped direct shipments from China to the U.S., instead choosing to supply from local U.S. warehouses and recruiting local U.S. sellers. This move is a response to the pressure of tariffs as high as 145%, signifying Temu's shift from a low-cost strategy to a local fulfillment model.

05/05 11:30

Trump Postpones Tariffs for 90 Days: Analysis of Divergent Trends in Taiwan Panel Market Across Three Key Product Lines

In early April, President Trump of the United States announced a "reciprocal tariff" policy on 75 countries, which was postponed for 90 days due to pressure, impacting the global electronics supply chain. Taiwan's panel industry felt the impact, as TV panel demand weakened and prices stayed stable; monitor panel prices slightly increased due to the demand for pre-stocking; while laptop panel demand remained stable, with prices unchanged. Taiwanese panel manufacturers, such as AU Optronics and Innolux, have responded to market changes by implementing production cuts and holding emergency meetings.

Service Sector Activity Rebounds, Expansion Momentum Remains

According to the Institute for Supply Management's (ISM) "Services Business Report" released on May 5, the services PMI rose from 50.8 in March to 51.6 in April, indicating that the industry is still in the expansion zone. This marks the 56th time in 59 months that expansion has been recorded since the post-pandemic recovery began in June 2020. ISM noted that a PMI above 48.6 usually aligns with overall economic growth, and this month's 51.6 corresponds to approximately 1% annualized GDP growth.

Despite the overall index increase, it is still 1 percentage point lower than the 12-month average of 52.6, indicating a slowdown in expansion momentum. ISM Services Survey Committee Chair Steve Miller stated, "Overall results are improving, but businesses still face challenges related to cost and policy uncertainty."

Price Pressure Surges to Two-Year High

The most notable change in April was the sharp rise in the price index. The ISM price index jumped from 60.9 in March to 65.1, the highest level since January 2021. This data reflects significant cost increases faced by businesses in procuring raw materials and services, mainly due to increased import tariffs and supply chain bottlenecks.

According to the ISM survey, 17 service sub-industries reported price increases, with only the arts, entertainment, and recreation industry as exceptions. Supplier delivery times also lengthened, with the supplier delivery index rising from 50.6 to 51.3, indicating increased supply chain pressure. ISM noted that extended delivery times are usually associated with a strong economy, but this time it is more likely due to businesses placing orders early to avoid tariffs.

Several companies reported extended delivery times for steel and other imported parts, with some factories unable to meet demand. Industries such as accommodation and food services, wholesale trade, and mining reported the most significant cost increases.

New Orders and Inventory Rise, Reflecting Resilient Domestic Demand

The new orders index rose from 50.4 in March to 52.3 in April, reaching a new high since December 2022, indicating that domestic demand remains strong. Some companies stated that they are purchasing goods in advance to cope with upcoming tariff increases, leading to increased inventory. The inventory index rose from 50.3 to 53.4, the highest since last October.

The ISM report noted that this "pre-stocking" behavior might be a response to anticipated future cost increases. Nevertheless, the business activity index fell from 55.9 to 53.7, indicating that businesses still face operational challenges.

Employment Index Remains in Contraction, Limited Labor Market Recovery

Although the services employment index rose from 46.2 in March to 49.0, it remains below the 50 threshold, indicating that overall employment is still in contraction. This is the second consecutive month that the employment index has been below 50, ending the previous five consecutive months of expansion.

Company responses indicated that some are "filling vacant positions," but others have implemented hiring freezes due to "uncertainty in government subsidies." The financial and information industries reported layoffs, reflecting a conservative attitude towards future spending and demand.

Industry Performance Diverges, Policy Uncertainty Becomes a Concern

Among the 18 service sub-industries, 11 reported growth, including accommodation and food services, wholesale trade, mining, and utilities, while six industries, such as finance and insurance and public administration, showed contraction. The education services industry expressed concern over federal research funding cuts, and the public administration sector noted that "trade wars and budget cuts have led to business crises."

The ISM report pointed out that some companies expressed dissatisfaction with the "unpredictability" of import tariff policies, especially real estate and leasing operators. Agricultural and fishing industry operators stated that tariffs have directly impacted small businesses reliant on Chinese imports.

References

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