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US July ISM services index slips below expectations as employment weakens
The ISM services report also shows prices paid jumped to 70.3, adding downside risk for Friday's non-farm payrolls and raising pressure on rate expectations.
The US July ISM services index came in at 54.1 versus 54.5 expected, down from 54.0 in the prior period, according to Forexlive. The report included mixed signals across components, with prices paid rising to 70.3 from 67.7, new orders improving to 57.2 from 55.1, and business activity at 59.1 versus 55.4. Employment fell to 47.4 from 51.2, moving back below 50. Forexlive noted the S&P Global final PMI for July was released shortly before this reading and reached 54.6 versus 53.6 previously, an 8-month high. While that points to some resilience in services activity, the bigger concern in the ISM data is employment weakening alongside rising inflation. The outlet said the employment drop could reflect temporary factors, such as jobs tied to the World Cup and USA 250 celebrations, but it remains worrisome. It also highlighted that today’s ADP employment number was soft, increasing the stakes for Friday’s non-farm payrolls report and pointing to added downside risks.