US Services Surveys Plunge… And Soar In July As Prices Paid Spike

Following the significant weakness exhibited by the Manufacturing surveys (and worsening ‘hard’ data), Services data 

• S&P Global US Services PMI ROSE from 52.9 to 55.7 in July – the highest since Dec 2024

• ISM Services PMI FELL from 50.8 to 50.1 (below expectations) and near the lowest since June 2024

Just ridiculous…

Under the hood the two surveys agreed on weakness in the labor market and soaring inflation.

The employment index dropped to 46.4, contracting for the fourth time in five months and marking one of the lowest readings since the pandemic.

The group’s measure of prices paid for materials and services, meanwhile, climbed to 69.9 — the highest since October 2022.

“A strong rise in service sector business activity helped offset a slowdown in the manufacturing sector in July, signaling encouragingly robust economic growth at the start of the third quarter,” according to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence

“While GDP has risen at an average 1.25% pace over the first half of 2025, July’s PMI is indicative of growth doubling to about 2.5%.“

“July’s expansion was driven by surging demand in the tech sector alongside rising financial services activity, the latter linked to improving financial conditions fueled in turn by recent stock market gains.

However, falling exports of services, which includes spending in the US by tourists, acted as a drag on growth alongside subdued demand from consumers more broadly.”

Spot the odd one out…

“The recent strengthening of demand has led to rising backlogs of work in the service sector, encouraging firms to take on staff again,“ Williamson added:

“There was some caution seen in terms of hiring and expansion, however, linked to sharply rising costs, often attributed to tariffs, as well as reduced optimism about future prospects.

Alongside a drop in optimism in the manufacturing sector, the reduced confidence in the service sector contributed to one of the gloomiest outlooks seen over the past three years, hinting at some downside risks to growth in the coming months.”

So once again, take your pick… choose your own adventure?

When will Trump fire the head of the ISM?!