WASHINGTON (Reuters) - The U.S. service industry signed for the first time in nearly a year in May, while businesses invested more for higher prices, a reminder that the economy is still in danger of experiencing very slow growth and high inflation.

The Supply Management Institute (ISM) said Wednesday its non-manufacturing Purchasing Managers Index (PMI) fell to 49.9 last month, the first decline since June 2024, below 50 points and the lowest reading, starting from April 51.6.

Economists who voted by Reuters predict that PMI's services will rise to 52.0 after trade tensions between the United States and China ease. A PMI reading below 50 indicates a contraction in the service sector, which accounts for more than two-thirds of the economy. Over time, ISM will have PMI readings above 48.6 as the overall economy grows.

ISM reported on Monday that manufacturing was signed for the third straight month in May, with suppliers taking up the longest time in nearly three years to provide input in tariffs.

President Donald Trump's import tariffs are sometimes enforced in disorderly ways, but they spread confusion among businesses. Economists say tariff uncertainty makes it difficult for companies to plan ahead.

Businesses from retailers, airlines to automakers have withdrawn or avoided providing financial guidance for 2025. Although economists don’t expect this year’s recession to be the focus of many, many are on the radar.

New order measures investigated by ISM fell to 46.4 from 52.3 in April, which could boost the frontline operation related to tariffs. Service industry customers believe that their inventory is related to business needs, which is not good for activities in the short term.

Supplier delivery performance continues to deteriorate. This, along with the extended delivery time of the factory, points to chains of tight supply chains that could cause inflation to pass shortages. Businesses are also seeking to pass on tax tariffs to consumers.

The ISM surveyed the supplier delivery service index rose to 52.5 from 51.3 in April. Readings above 50 indicate slow delivery.

Extended delivery time for suppliers is often associated with a strong economy. However, due to bottlenecks in the supply chain, delivery times may get longer and longer.

The measurement of the survey measures is the highest level of the survey measurement starting from 65.1 in April, due to the highest level of survey volume. Most economists expect inflation and employment tariffs could appear apparent in the summer in the so-called tough economic data.