The S&P 500 (SPX) opened Tuesday’s trading session in the green, although the benchmark index has since fallen to negative territory after a disappointing ISM Services Purchasing Managers Index (PMI) update.
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July’s Services PMI fell to 50.1 from 50.8 in June as service sector activity fell month-over-month. In addition, July’s Services PMI was below the consensus estimate of 51.5.
Services PMI Still Expanding, Approaches Contraction Territory
On the bright side, services activity is still growing. A PMI above 50 indicates expansion, while a PMI below 50 indicates contraction. The Services PMI has now shown expansion in 12 of the last 13 months.
At the same time, a reading of 50.1 is treading water and close to contraction territory. Tariffs could have contributed to the lower reading as businesses remain cautious about rising input costs. Seasonality and rising temperatures could have played a role as well.
“July’s PMI level continues to reflect slow growth, and survey respondents indicated that seasonal and weather factors had negative impacts on business,” said Steve Miller, Chair of the ISM Services Business Survey Committee.
Track the ISM Services PMI and other key economic releases with TipRanks’ Economic Calendar.
