US services sector activity expanded in July at a modest pace, data released on Thursday showed.

The update came on the heels of manufacturing PMIs which suggested America’s factories remain mired in a protracted downturn, even if a few scattered bright spots may together constitute a light at tunnel’s end.

ISM services printed 52.7, below estimates, but not by a lot. Consensus wanted 53.1. The range, from five-dozen economists, was 52 to 54.7.

Meanwhile, the final read on S&P Global’s services gauge for last month was basically unchanged from the flash print, at 52.3.

“The service sector remains the main engine of growth in the US economy, though there are signs of the motor sputtering amid rising headwinds,” S&P Global’s chief business economist Chris Williamson said Thursday. He flagged a “sharp” reduction in new business to make the point.

Under the hood, key ISM subindexes did indeed suggest the motor is “sputtering,” as Williamson put it. New orders, activity and employment all fell, even as they remained in expansion territory. The employment gauge, at 50.7, is precariously close to dipping below the demarcation line. Recall that the factory employment index just dropped to a three-year low.

Anthony Nieves described “a slight pullback” in the rate of growth, and said “the majority of respondents” in the survey remain “cautiously optimistic” about the outlook, both for business conditions and the overall economy. I’d note that the US economy is pretty much all services, so there’s not a huge distinction there.

Notably, the prices paid gauge in the ISM survey rose to the highest since April.

At 56.8, there’s no panic, but it’s certainly worth mentioning. Thanks in part to the recent rally in commodity prices, the ISM factory prices gauge ticked up last month too.

S&P Global’s Williamson underscored the point. “An additional concern is that prices charged rose at an accelerated rate in July, often linked to higher staff costs,” he said. “Such a wage-led stickiness of inflation in the vast service sector will naturally worry policymakers.”

That concern just won’t go away, and it’s the Achilles heel of the soft landing narrative. If wage pressure in services compels businesses to keep raising prices (in an effort to protect margins), that could put a floor under core inflation, and may push out the onset of rate cuts from the Fed. The longer policy is restrictive, the higher the risk of a hard landing — or at least a landing that’s harder than it might’ve been.

I don’t want to overstate the case, but the stagflationary vibe is lingering like stale cigarette smoke. July’s PMIs suggested the services expansion is weakening while the factory recession persists, and price pressures on the services side are stubborn.

Nothing a $25 Bloody Mary and a $15 tequila chaser can’t fix, though.