The Institute for Supply Management (ISM) announced on the 5th (local time) that its services Purchasing Managers' Index (PMI) for July recorded 54.1, rising 0.1 points from June's 54.0 but falling short of the market expectation of 54.5. The reading indicates the US services sector maintained expansion for the 25th consecutive month, though at a slightly slower pace than anticipated. S&P Global separately reported its July services PMI final reading at 54.6, exceeding the market forecast of 53.6, signaling accelerating economic growth entering the third quarter.
ISM Services PMI Reports July Expansion at 54.1
The July figure stands 0.7 points above the 12-month moving average of 53.4. ISM stated that the overall economy maintained growth (expansion) for 74 consecutive months through July. A PMI reading above 50 indicates expansion, while below 50 signals contraction.
The business activity index rose 3.7 points to 59.1 from June's 55.4. The new orders index increased 2.1 points to 57.2 from 55.1 in June. The inventory index grew to 51.4 from June's 51.2, accelerating its growth pace.
Thirteen industries recorded growth in July, including retail trade, transportation and warehousing, wholesale trade, and finance and insurance.
Employment Index Contracts While Price Pressures Intensify
The employment index dropped 3.8 points to 47.4 from June's 51.2, returning to contraction territory after just one month. The price index rose 2.6 points to 70.3 from the previous month's 67.7, continuing its upward trend for the 110th consecutive month.
Steve Miller, chair of the ISM Services Business Survey Committee, stated: "While respondents continued to mention tariff impacts and Middle East conflicts, the frequency decreased significantly compared to previous reports. The World Cup was mentioned again in responses related to increased business activity and new orders."
Miller added: "Overall, the US services economy is showing sustained resilience. Concerns about mortgage rates and inflation persist, and recent oil price increases are at the center of price ripple effects."
S&P Global Services PMI Exceeds Forecast at 54.6
S&P Global's July services PMI final reading of 54.6 surpassed the market expectation of 53.6. Chris Williamson, chief business economist at S&P Global Market Intelligence, stated: "The July PMI final reading came in stronger than the previously released flash estimate, suggesting an encouraging acceleration of economic growth at the start of the third quarter."
Williamson noted: "This PMI indicates GDP is growing at an annualized rate of 2.3%, following the 1.5% increase seen in the second quarter. Business optimism has surged to its highest level since last November."
FAQ
What did the ISM report for US services PMI in July?
The ISM reported a services PMI of 54.1 for July, up 0.1 points from June's 54.0 but below the market expectation of 54.5.
Why did the employment index in the ISM services report drop in July?
The employment index fell 3.8 points to 47.4 from June's 51.2, returning to contraction territory after one month, though the source does not specify the underlying cause for this decline.
How does the S&P Global services PMI compare to ISM's reading for July?
S&P Global's July services PMI final reading was 54.6, higher than ISM's 54.1 and exceeding the market forecast of 53.6.
