U.S. service sector output rises strongly in July, but growth pace slowest since April

The seasonally adjusted IHS Markit Flash U.S. Services PMI Business Activity Index dropped in the month of July. The flash index fell from June’s 56.5 to 56.2 in July. The latest reading hinted at a strong rise in service sector output, but the rate of growth was the slowest since April. There were signs of a lower pressure on operating capacity in July, in spite of another sharp rise in new business intakes. This was highlighted by a decline in backlogs of work for the first time since April 2017.

Business optimism about the year ahead outlook rebounded a bit in the month. But there were signs of greater caution regarding staff hiring, with the latest upturn in employment numbers the weakest since January. In the meantime, input cost inflation continued to be close to the four-and-a-half year peak seen in May.

Increased fuel prices were frequently cited by survey respondents. Service providers sough to pass on a proportion of their increased costs to clients in July, with the pace of prices charged inflation the fastest since the survey started in October 2009.

At 19:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -109.965. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex