August 03, 2022 | 11:21
Services Step Up?
Well, this is a nice surprise: The U.S. services sector expanded at a faster pace in July. The ISM services PMI unexpectedly climbed 1.4 pts to a three-month high of 56.7, halting three straight months of decline.
Business activity climbed for the second month in a row, up 3.8 pts to 59.9, marking the highest level since the start of the year. Meantime, new orders expanded to a four-month high and supplier delivery times improved to the best level since January 2021. The employment index, though still in contractionary terrain, edged up 1.7 pts to 49.1. And, prices paid slumped to the lowest level since February 2021.
However, digging into some of the services industry comments painted a somewhat more downbeat picture:
Bottom Line: Despite a slew of headwinds—multi-decade high inflation, tight labour market conditions, weaker demand, and rising interest rates—the services sector managed to confound expectations, climbing to the highest level in three months. Still, one month of data doesn’t make a trend. Overall, the services PMI is well below the record high of 68.4 posted back in November 2021, as momentum has quickly slowed.