U.S. ISM nonmanufacturing index falls to 11-month low in July

The ISM nonmanufacturing index dropped in July to an 11-month low. The nonmanufacturing index fell to 55.7, below consensus expectations. The fall was due to new orders and business activity. The index of new orders dropped 6.2 points, while the measure of business activity retreated from the 13-year high reached in June, to 56.5.

However, both measures continue to be comfortably in the growth zone. There were also some bright spots in the July report. The index on employment rose to 56.1 and is in line with the BLS report on July employment seen earlier this morning. Moreover, the backlog of orders fell, while supplier deliveries rebounded, implying an easing of supply restraints for service providers. Moreover, the press release noted that ‘the majority of respondents remain positive about business and the economy’.

Overall, despite the fall in the index, service sector sentiment seems to be mostly optimistic, stated Barclays.

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