The July nonmanufacturing headline index released by the Institute for Supply Management (ISM) showed a slowdown in activity, partly due to slowing job growth.
Key Point Nonmanufacturing Headline Index fell 1.2 points to 52.7 Median market forecast compiled by Bloomberg was 53.1 last month 53.9 Index 50 marks the line between expansion and contraction in activity
The breakdown showed a decline in the employment index, which showed only modest growth in employment in the service sector. Business sentiment and new orders slowed somewhat, but it suggests that consumer demand for services remains strong.
Upper row: non-manufacturing general business conditions index, lower row: non-manufacturing employment index
Source: ISM
The order backlog picked up for the first time since February, and exports expanded at a healthy pace.
Activities expanded in 14 industries, including construction and lodging/restaurant services.
“The majority of respondents are cautiously optimistic about business conditions and the economy in general,” said Anthony Nieves, chairman of the ISM non-manufacturing survey committee, in a statement.
While manufacturing has struggled with headwinds from rising interest rates and changing consumer tastes, the services sector, which is a larger part of the U.S. economy, has shown resilience.
Inflationary pressures are easing, despite low unemployment and continued wage growth supporting household spending. That said, the Fed is still a long way off from its target, and a strong economy could lead to persistently high price pressures.
The purchase price index rose to 56.8, the highest level in three months, but has settled into pre-coronavirus territory.
The employment index fell to 50.7. It suggested that the brakes were applied to employment in the service industry.
The July U.S. jobs report, released on Wednesday, is expected to see a 200,000 increase in nonfarm payrolls, while the unemployment rate is expected to remain unchanged at 3.6%.
See table for detailed statistics.
Original Title: July US ISM Services Falls to 52.7; Est. 53.1
US Service Sector Activity Expanded at Slower Pace in July
US Service Sector Activity Expanded at Slower Pace in July(excerpt)
(updates with details)
2023-08-03 14:07:08
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