ISM Services PMI Barely Hangs On to Expansion

The American services engine came more than one point under expectations but stayed in the green by the slimmest of margins last month, even as price pressures roared back to life and trade frictions deepened. The Institute for Supply Management’s Services Purchasing Managers’ Index (PMI) came in at 50.1 for July, just a whisker above the 50-point line that separates growth from contraction. While that technically marks a second straight month of expansion, the reading slipped 0.7 percentage point from June and now sits more than two points below the 12-month average. Markets greeted the tepid data nervously—especially after record-setting $3,383 per-ounce print for gold, a classic barometer of distrust in fiat stability.

Digging beneath the headline, the details skew soft. Business Activity cooled to 52.6, New Orders eased to 50.3, and the Employment Index shrank to 46.4—its fourth contraction in five months. Manufacturing looks even shakier: July’s factory PMI dropped to 48.0, extending a year-long stretch of sub-50 readings. Survey respondents blamed “higher tariffs” for escalating input costs and for shelving capital projects—a reminder that when politicians weaponize trade, real production often gets caught in the crossfire.

Source: ismworld.org

Supply lines are showing new strains as well. Supplier Deliveries rose to 51.0 for an eighth consecutive month, signaling slower freight times amid mounting port and rail congestion. Inventories remain in modest expansion, yet the Backlog of Orders has now contracted for five straight months, hinting that demand could be faltering faster than warehouses can adjust. Internationally, both export and import gauges flipped from growth to contraction in July, underscoring how tit-for-tat levies are chilling cross-border commerce.