United States: Services activity remains upbeat in July
The S&P Global U.S. Services Purchasing Managers’ Index (PMI) dipped to 55.0 in July from 55.3 in June. As a result, the index remained above the 50.0 no-change threshold, but signaled a softer—albeit still marked—improvement in services-sector business activity compared to the previous month.
July saw a solid increase in new orders, including a marginal rise in new business from abroad for the first time in six months, and concomitant increases in output and employment.
There was the quickest rate of input cost inflation in four months, primarily due to higher wage and transportation costs. However, the pace at which companies raised their selling prices softened for the second consecutive month due to competitive pressures. Finally, business sentiment remained optimistic, with expectations that output will continue to increase over the next 12 months.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said:
“While manufacturers are reporting reduced demand for goods, this in part reflects a further switching of spending from consumers towards services such as travel and recreation. However, healthcare and financial services are also reporting buoyant growth, fueling a wide divergence between the manufacturing and service economies. Thanks to the relatively larger size of the service sector, the July PMI surveys are indicative of the economy continuing to grow at the start of the third quarter at a rate comparable to GDP rising at a solid annualized 2.2% pace.”