Business activity index vs 55.9 priorEmployment 47.9 vs 48.0 priorNew orders 57.3 vs 53.5 priorPrices paid 71.3 vs 70.7 priorSupplier deliveries 55.2 vs 56.8 priorInventories 62.5 vs 53.1 priorBacklog of orders 51.3 vs 53.0 priorNew export orders 50.0 vs 52.1 priorImports 51.1 vs 54.7 priorInventory sentiment 55.2 vs 55.1 priorThe details are a tad worse than the headline and that prices paid number is worrisome. Despite several indicators showing a better jobs market, this one is still in contraction.Comments in the report:“We are seeing the dual effects of the administration’s tariff policy dynamics and the conflict in the Persian Gulf affect our pricing. Suppliers across numerous industries are trying to pass price increases for fuel surcharges and increased input costs for resin-based products and the like. This is the definition of inflationary pressure starting to affect us. We expect significant cost increases to impact us by late second quarter (Q2) and definitely in Q3.” [Accommodation & Food Services]“Starting to see increased supply constraints and associated price increases, especially for construction materials and computers like laptops and tablets.” [Educational Services]“Patient volumes and activity remain high, employment is steady and supply chains are operating effectively. There are some product lines on allocation as a direct result of the Middle East conflict; however, the current state is manageable. Another concerning factor on the horizon: the current drop-out rate on Affordable Care Act (ACA) health insurance plans after the federal subsidy was eliminated as of January 1. Year-to-date dropout rates are approaching 14 percent, indicating we may be seeing a potential increase in uninsured patients in the foreseeable future. The short-term forecast is cautious optimism.” [Health Care & Social Assistance]“The groundwood paper market remains tight. The announced sale of Norpac to International Paper has caused some tightness. We figure intellectual property issues will eventually take Norpac out of the book market. Freight remains expensive, with gas prices and fuel surcharges starting to come through.” [Information]“Effective commodity prices (oil) have increased about 20 percent so far in 2026.” [Mining]“Due to rising fuel costs, a major distributor has decided to hold freight with resellers until a new contract is negotiated that addresses these increased expenses. Unfortunately, this means there will be delays that will impact our internal projects.” [Public Administration]“Supply chain reliability for aviation parts and consumables has generally improved, but volatility in jet fuel prices — driven by geopolitical and logistics disruptions — continues to complicate forecasting and inventory planning. Wage inflation and a tight labor market for skilled personnel are increasing supplier service costs, and growing sustainability expectations are raising demand (and cost) for sustainable aviation fuel, with availability still uneven by region. Overall, conditions are more stable than during the peak of supply chain disruptions, but elevated fuel, labor and sustainability-related costs remain key factors shaping our purchasing strategy and industry outlook.” [Transportation & Warehousing]“Inflationary pressures continue to impact pricing in certain categories. General concern over supply continuity due to unprecedented demand continues in the utility space.” [Utilities]“Capital expenditure energy projects continue to be delayed or revamped based on macroeconomic factors. Data center power generation projects are driving demand and reducing available inventory across the piping market.” [Wholesale Trade]Before today's report, the ISM services report showed the U.S. services sector remained in expansion through April, though the details were more mixed than the headline suggested. The Services PMI slipped to 53.6 from 54.0 in March, marking the 22nd straight month above the 50 threshold. This article was written by Adam Button at investinglive.com.