A small slowdown in the growth of the US services sector. The ISM Non-Manufacturing PMI slips by 1 point to 55.5 points in July. This is still above the 50 point threshold separating growth from contraction. But on the more worrying side, the employment component dropped from 52.7 to 51.4 points, reflecting slower hiring in the biggest sector in the US.
The US dollar is on the retreat, erasing some of the gains seen earlier.
In the accompanying comments, ISM says that three industries were contracting: Other Services; Agriculture, Forestry, Fishing & Hunting; and Mining. The latter is not a surprise given the fall in oil prices. Yet these are 3 out of 18 sectors. The other 15 are growing.
The ISM Non-Manufacturing purchasing managers’ index for July was expected to stand at 56 points, a small drop from June’ 56.5 level and reflecting strong growth. This report for the biggest sector, services, provides a big hint for the Non-Farm Payrolls release on Friday. The employment component is of specific interest.
The US dollar was attempting a recovery ahead of the publication. This is thanks to a small beat in the ADP NFP. According to this other NFP hint, 179K private sector jobs were gained in July. ADP and the NFP were off in recent months, whereas ADP showed stability while the official number showed poor results in April and May while June saw a whopping 287K figure.
Earlier, Markit’s services PMI was upgraded from 50.9 to 51.4 points in the final read for July.
The bounce in the dollar may have also been the result of a fatigue in dollar-selling. The greenback has been under pressure after the poor GDP report on Friday.
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