If you could get past the deluge of dire headlines on Monday, there was some good macro news on offer: ISM delivered an upbeat read on the US services sector.

The headline print for July was 51.4, ahead of consensus and back in expansion territory. The business activity gauge rose smartly to 54.5 from 49.6 the prior month.

To state the obvious, the upside surprise won’t shift the overarching narrative (which essentially says the Fed’s woefully behind the curve and that Jerome Powell missed his chance to land the proverbial plane). But the incrementally good news was welcome, particularly given the extent to which a very poor read on ISM manufacturing contributed to the recession optic last week.

The final read on S&P Global’s services sector gauge for the US economy in July was 55, down from the flash print but still solidly in expansion territory.

Chris Williamson, S&P Global’s chief business economist, lauded “another strong expansion of business activity in the service sector, which over the past two months has enjoyed its best growth spell for over two years.” That, he went on, marks a stark “contrast with the deteriorating picture seen in the manufacturing sector.”

The employment gauge in the ISM services release jumped to 51.1 from 46.1 the prior month. The juxtaposition with a highly disconcerting plunge on the same gauge in the manufacturing report was notable indeed. The prices index moved up to 57, but at this point inflation fears have taken a backseat to growth worries. The new orders index showed a welcome five-point jump out of contraction territory.

The ISM anecdotes were subdued but hardly indicative of panic. If you splice a few of them together, you come away with a benign, if not exactly inspiring, assessment: “Business in 2024 has been steady [and] conditions seem to be stable at this time [but] high interest rates continue to affect long-term buying decisions [and] high food costs are having an impact on customer demand.”

Angst about the election is starting to show up. ISM’s Steve Miller noted that at least one panelist was worried about tariffs.

S&P Global’s Williamson said the relative size of the services sector (versus manufacturing) means the US economy started Q3 on decent footing with growth running “at a solid annualized 2.2% pace.”

With that in mind, it’s worth asking whether markets are overstating the case when it comes to the immediacy of recession concerns.