The US services sector was more vibrant than expected last month, according to data you probably shouldn’t trade (or rely) on.
That’s a deliberately humorous take, but there’s truth in it. It’s not clear how much informational value there is to be had in PMIs at this juncture. But for what it’s worth, the gauge formerly known as ISM non-manufacturing printed 58.1 for July.
The market was looking for 55, so this is a nice beat, especially coming off June’s 57.1 reading. The range was 52.4 to 60.
New orders rose to 67.7. That is the highest on record going back 23 years.
This is somewhat surprising considering how reinstated lockdowns have impacted businesses in the services sector. That said, the employment gauge slipped and remains squarely in contraction territory.
This comes on the heels of a beat for ISM manufacturing earlier this week.
To the extent you’re inclined to read anything into July’s report, the pessimists among you might focus on the employment reading, especially considering Wednesday’s (highly) disappointing ADP numbers.
Meanwhile, the final read on IHS Markit’s services PMI for July ticked higher from the flash print to 50 (from 49.6).
“The service sector is showing welcome signs of stabilizing after the unprecedented downturn seen during the second quarter, but many companies continue to struggle with virus-related constraints, especially in states where social distancing restrictions have been tightened again”, Chris Williamson, Chief Business Economist at IHS Markit, said.
“The US was the only major economy to see COVID-19 containment measures tighten again in July”, he added. “This is reflected in the data, with new business inflows falling at an increased rate to hint at the possible start of a double-dip in business activity”.
Who knows, folks. Who knows.
