US economy shows signs of 'paralysis' as new data reveals hiring slowdown, activity contraction in May

For months, US economic data has shown resilience, with layoffs remaining low and business activity staying steady despite fears over policy uncertainty. But the tide may be shifting. Multiple data points this week have shown signs of slowing as a wide swath of tariffs has been in effect.

On Thursday, weekly filings for unemployment benefits hit their highest level since October 2024, adding to a slew of data showing a cooling economy leading into the Friday morning release of the May jobs report.

Earlier in the week, the Institute for Supply Management's Services PMI registered a reading of 49.9 in May, below the 51.6 seen in April. Readings above 50 for this index indicate an expansion in activity, while readings below 50 indicate contraction. May's data marked just the fourth time the services sector has fallen into contraction in the past five years.

Jefferies US economist Tom Simons wrote in a note to clients that the ISM services data likely reflects "more signs of a pause in activity rather than a steep contraction."

https://finance.yahoo.com/news/us-economy-shows-signs-of-paralysis-as-new-data-reveals-hiring-slowdown-activity-contraction-in-may-133658422.html