The latest report by S&P Global showed on Wednesday the seasonally
adjusted final S&P Global U.S. Services Business Activity Index (PMI) came
in at 47.3 in July, being down from 52.7 in June but slightly above the earlier
released “flash” estimate of 47.0. The latest reading pointed to the first
contraction in business activity across the U.S. service sector since June
2020.
Economists had foreseen the indicator to remain unrevised at 47.0.
According to the report, output decreased at the fastest pace since May
2020, while new orders returned to growth, but the rate of their expansion was historically
subdued. In addition, service providers’ expectations regarding the outlook for
output weakened, as confidence declined to a 22-month low amid concerns about
inflation and wider economic conditions. The pace of job creation was the
slowest since January.
On the price front, input costs and output charges rose at the weakest
paces for 5 and 16 months, respectively, but remained historically elevated.