U.S. Services Index Indicates Turnaround In July

(RTTNews) - Service sector activity in the U.S. turned positive in the month of July, according to a report released by the Institute for Supply Management on Monday.

The ISM said its services PMI climbed to 51.4 in July from 48.8 in June, with a reading above 50 indicating growth. Economists had expected the index to rise to 51.0.

The slightly bigger than expected increase by the headline index partly reflected turnarounds by both new orders and business activity.

The new orders index surged to 52.4 in July from 47.3 in June, while the business activity index jumped to 54.5 in July from 49.6 in June.

The ISM said the employment index also shot up to 51.1 in July from 46.1 in June, indicating a rebound by employment in the service sector.

Meanwhile, the supplier deliveries index slumped to 47.6 in July from 52.2 in June, marking the first time the index was in contraction (faster) territory and the other three indexes registered expansion since November 2023.

The report also said the prices index inched up to 57.0 in July from 56.3 in July, suggesting a slightly faster rate of price growth.

"Survey respondents again reported that increased costs are impacting their businesses, with generally positive commentary on business activity being flat or expanding gradually," said Steve Miller, Chair of the ISM Services Business Survey Committee.

"Comments continued to express a wait-and-see attitude regarding the upcoming presidential election, with one respondent expressing concern over potential increases in tariffs," he added. "Many panelists noted a return to more stable supply chain performance, albeit with higher costs."

Last Thursday, the Institute for Supply Management released a separate report showing U.S. manufacturing activity unexpectedly contracted at an accelerated rate in the month of July.

The ISM said its manufacturing PMI fell to 46.8 in July from 48.5 in June, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 48.8 percent.

With the bigger than expected decrease, the manufacturing PMI dropped to its lowest level since hitting 46.6 in November 2023.