The July ISM Services Index came in at 54.1, up slightly from June’s 54.0, according to the Institute for Supply Management. A value above 50 reflects expansion in the services sector, while a value below 50 indicates contraction. The New Orders Index registered 57.2, up modestly from June’s 55.1. The Employment Index edged down to 47.4, a decrease from 51.2 in June and moved below the 50 threshold. Prices Paid increased to 70.3, from 67.7 in June, suggesting cost pressures remain elevated.
The ABA Office of the Chief Economist believes despite the higher July topline index, lower employment activity and continued cost pressures in the services sector may weigh on U.S. economic activity. The press release for the index noted that AI implementation is coinciding with a small reduction in employment headcount. For banks, price pressures and declining employment figures could weigh on consumer spending and credit performance.
