Service Sector Post Strong Recovery Reading for Second Straight Month
Tempe, Arizona (PPD) — The Institute for Supply Management (ISM) Non-Manufacturing Index (NMI) rose to 58.1% in July, stronger than economists expected. The reading indicates U.S. service sector expanded for the second month after two months in contraction.
Forecasts ranged from a low of 53.5 to a high of 57.5. The consensus forecast was 55.0. In June, the NMI posted the largest single-month percentage-point gain since the NMI debut in 1997, and now in July is at the highest level since February 2019.
“Respondents remain concerned about the pandemic; however, they are mostly optimistic about business conditions and the economy as businesses continue to reopen,” Anthony Nieves, Chair of the ISM Services Business Survey Committee. “Sentiment varies across industries, as they are impacted differently.”
| Services NMI | Manufacturing PMI | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Index | Series Index Jul | Series Index Jun | Percent Point Change | Direction | Rate of Change | Trend** (Months) | Series Index Jul | Series Index Jun | Percent Point Change |
| Services PMI | 58.1 | 57.1 | +1.0 | Growing | Faster | 2 | 54.2 | 52.6 | +1.6 |
| Business Activity/ Production | 67.2 | 66.0 | +1.2 | Growing | Faster | 2 | 62.1 | 57.3 | +4.8 |
| New Orders | 67.7 | 61.6 | +6.1 | Growing | Faster | 2 | 61.5 | 56.4 | +5.1 |
| Employment | 42.1 | 43.1 | -1.0 | Contracting | Faster | 5 | 44.3 | 42.1 | +2.2 |
| Supplier Deliveries | 55.2 | 57.5 | -2.3 | Slowing | Slower | 14 | 55.8 | 56.9 | -1.1 |
| Inventories | 52.0 | 60.7 | -8.7 | Growing | Slower | 2 | 47.0 | 50.5 | -3.5 |
| Prices | 57.6 | 62.4 | -4.8 | Increasing | Slower | 4 | 53.2 | 51.3 | +1.9 |
| Backlog of Orders | 55.9 | 51.9 | +4.0 | Growing | Faster | 2 | 51.8 | 45.3 | +6.5 |
| New Export Orders | 49.3 | 58.9 | -9.6 | Contracting | From Growing | 1 | 50.4 | 47.6 | +2.8 |
| Imports | 46.3 | 52.9 | -6.6 | Contracting | From Growing | 1 | 53.1 | 48.8 | +4.3 |
| Inventory Sentiment | 50.0 | 55.9 | -5.9 | Unchanged | From Too High | 1 | N/A | N/A | N/A |
| Customers’ Inventories | N/A | N/A | N/A | N/A | N/A | N/A | 41.6 | 44.6 | -3.0 |
| Overall Economy | Growing | Faster | 2 | ||||||
| Services Sector | Growing | Faster | 2 |
**Number of months moving in current direction
The ISM Manufacturing Index (PMI) also came in stronger than expected in July, up to 54.2% from 52.6% in June. The PMI also exceeded pre-pandemic levels, hitting the highest level since April 2019.
