U.S. ISM Services PMI Declines in July
by:Tom Moeller
|in:Economy in Brief
Summary
- Service-sector total retraces a piece of June’s increase.
- Business activity & employment readings weaken.
- Prices index moves higher.
Service sector business activity in the U.S. economy eased last month, according to the Institute for Supply Management. The ISM Services PMI fell to 52.7 in July, and gave back a piece of its rise to a four-month high of 53.9 in June. The index hit a low of 49.2 last December. While increased, the reading remained well below its peak of 67.6 in November 2021. A reading above 50 represents an increase in activity. The Action Economics Forecast Survey expected 53.2 for July.
Haver Analytics constructs a composite index combining the services index and the manufacturing reading released Tuesday. This index fell to 51.9 in July after rising to 52.8 in June. These readings remain down from the record 66.7 in November 2021. The series dates back to July 1997.
In the latest services survey, the business activity measure fell to 57.1 from 59.2 in June as a lessened 24.3% (NSA) of respondents reported better activity and an easier 7.5% reported deterioration. The employment index fell to 50.7 in July from 53.1 in June. It has been moving sideways since early last year. A lessened 14.2% (NSA) of respondents reported more hiring while an easier 11.5% reported a decline. The new orders reading of 55.0 compared to 55.5 in June. A reduced 26.6% (NSA) of respondents reported higher new orders last month while a lessened 14.9% reported fewer. Working higher, the supplier deliveries index improved to 48.1 (NSA) in July from 47.6 in June, but remained well below the October & November 2021 high of 75.7.
The prices index rose to 56.8 in July after declining to 54.1 in June. The index remained well below the record 84.5 in December 2021. A fairly steady 22.4% (NSA) of respondents reported price gains while a lessened 7.7% reported price declines.
Additionally, the new export orders index slipped to 61.1 in July after rising to 61.5 in June. The reading remained near the highest level since last September, after plunging to 43.7 in March. The imports index fell to 52.3 after increasing to 54.6 in June. The order backlog series surged to 52.1 after rising moderately to 43.9 in June. It remained down from a record 67.3 in October 2021. The inventory change index fell to 50.4 after declining to 55.9 in June. These series are not seasonally adjusted and are not included in the ISM Services PMI total.
The ISM figures are available in Haver's USECON database, with additional detail in the SURVEYS database. The expectations figure from Action Economics is in the AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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