U.S. service sector growth surged well beyond expectations in April, according to PMI data

Data released Monday showed that the U.S. services sector expanded at a faster pace in April, driven by a sharp rise in new orders and input prices, with costs for materials and services climbing to their highest levels in over two years.

The ISM Non-Manufacturing Purchasing Managers Index (PMI) rose to 51.6 in April, up from 50.8 in March, and significantly exceeded market expectations of 50.2.

The PMI has remained above the 50-point mark—which separates growth from contraction—since February 2024, signaling continued expansion in the services sector, which makes up more than two-thirds of the U.S. economy.

In addition to strong new orders and rising prices, the report highlighted solid job gains in April, reinforcing signs of economic resilience despite a GDP contraction in the first quarter and growing concerns about a potential slowdown.

Still, economists remain cautious, warning that trade tariffs could begin to take a heavier toll on economic activity, with the most significant impact likely to be felt by summer.