Services improved slightly in July with the ISM non-manufacturing index raising to 52.6, up from 52.1 in June, however still below the 53.7 of May. In June the index was at its lowest level since January 2010. Although the report is not encouraging, any reading above 50 indicates growth in the service sector. In fact, the non-manufacturing index has remained above 50 for over 30 consecutive months.
The details of July’s report were mixed. The general business activity index rose 5.5 points, to 57.2 from 51.7 in June. However, the employment index fell 3.0 points, to 49.3, below its neutral threshold of 50 for the first time since December 2011.
The backlog orders index dropped in July, falling 3.0 points to 44.5, while the inventory index rose 1.5 points.
Combined with the manufacturing index, which contracted for the second consecutive month in July, the July ISMs suggest the economy is moving sideways.
Read the ISM's Report.