U.S. Services Sector Wobbles in July as Growth Slows and Costs Surge

Downtime in the Services Sector

Key Highlights

• The ISM Services PMI slipped to 50.1% in July, down from 50.8% in June—still technically growing, but barely.
• Employment declined further, with the Employment Index at just 46.4%, signaling contraction and marking one of the weakest readings in months.
• Costs are climbing: the Prices Index surged to 69.9%, its highest level since late 2022.
• New orders are fading, and export demand is shrinking, indicating growing uncertainty and sluggish momentum.

Why It Matters

• The services sector, which makes up the majority of the U.S. economy, is showing signs of strain—raising concerns about economic resilience.
• Persistent inflation, tightening hiring, and wavering demand create a perfect storm for a "stagflation-lite" scenario.
• Businesses are proceeding cautiously amid tariff uncertainty, resource constraints, and rising input costs.

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