ISM Services Survey Shows Activity Almost Stagnates; S&P Data Indicate Faster Growth

03:05 PM EDT, 08/05/2025 (MT Newswires) -- Two surveys released Tuesday painted a mixed picture of the US services sector in July, with Institute for Supply Management data showing growth almost stalled and S&P Global (SPGI) indicating the fastest expansion pace so far this year.

The ISM's purchasing managers' index edged down to 50.1 last month from 50.8 in June. The consensus was for 51.5 print in a survey compiled by Bloomberg. A reading above 50 indicates the services sector economy is generally expanding.

"The softer trend in ISM services, coupled with an even worse performance in its manufacturing counterpart, are indicative of slowing US economic activity -- a theme that we anticipate will become a more entrenched in the third quarter," Admir Kolaj, an economist at TD Economics, said in a report.

On Friday, ISM data showed that US manufacturing sector activity contracted at a faster rate sequentially in July to mark the fifth consecutive downturn.

The ISM's services business activity gauge dropped to 52.6 last month from 54.2 in June, while new orders fell to 50.3 from 51.3. The prices index increased to 69.9, the highest reading since October 2022, from 67.5. The employment measure decreased to 46.4 from 47.2.

"July's PMI level continues to reflect slow growth, and survey respondents indicated that seasonal and weather factors had negative impacts on business," Steve Miller, chair of the ISM's services business survey committee, said in a statement. "The employment index's continued contraction and faster expansion of the prices index are worrisome developments."

Separately, S&P Global (SPGI) said its services PMI gauge hit a seven-month high of 55.7 in July from 52.9 the month prior. The consensus in a Bloomberg survey was for a reading of 55.2. Inflationary pressures strengthened last month amid the impact of tariffs, while optimism reached a three-month low, according to the data provider.

"A strong rise in service sector business activity helped offset a slowdown in the manufacturing sector in July, signaling encouragingly robust economic growth at the start of the third quarter," S&P Global Market Intelligence Chief Business Economist Chris Williamson said. "July's expansion was driven by surging demand in the tech sector alongside rising financial services activity."

S&P Global's (SPGI) manufacturing PMI data released Friday indicated that operating conditions in July deteriorated for the first time this year.

"Alongside a drop in optimism in the manufacturing sector, the reduced confidence in the service sector contributed to one of the gloomiest outlooks seen over the past three years, hinting at some downside risks to growth in the coming months," Williamson said Tuesday.

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