ISM Services PMI Rises but Misses Forecast
Activity in the U.S. services sector continued to grow in July, though the results fell short of expectations. The ISM Services PMI edged up to 54.1 from 54.0 in June, missing the forecast of 54.5. A reading above 50 indicates continued expansion in the services sector, marking 25 consecutive months of growth.
Beneath the headline figure, business activity actually strengthened. The business activity index rose to 59.1 from 55.4, while new orders increased to 57.2 from 55.1. These figures suggest that demand in the services sector remains robust and the U.S. economy is not yet showing signs of a sharp slowdown.
However, the employment component sent a different signal. The employment index dropped sharply from 51.2 to 47.4, slipping back into contraction territory and hitting its lowest level since March. This data could raise concerns that job growth in the services sector is weakening ahead of the Non-Farm Payrolls (NFP) report, even though the ISM index is not a direct predictor of NFP figures.
Price pressures also remained high. The prices-paid index surged to 70.3 from 67.7, indicating that service companies are still grappling with rising costs for fuel, labor, and oil-based products. Such conditions could prompt the Federal Reserve to remain cautious about easing policy, despite the headline data missing expectations.
Source: Newsmaker.id
