U.S. Composite PMI Falls Amid Slowing Growth In Services

Key Insights

• Manufacturing PMI grew from 46.3 in June to 49 in July. 
• Services PMI decreased from 54.4 in June to 52.4 in July. 
• Composite PMI declined from 53.2 in June to 52 in July. 

On July 24, S&P Global released Flash PMI reports for July. Manufacturing PMI increased from 46.3 in June to 49 in July, compared to analyst consensus of 46.4. Numbers below 50 show contraction.

Services PMI declined 54.4 to 52.4, compared to analyst consensus of 54. Numbers above 50 show expansion.

Composite PMI decreased from 53.2 to 52 due to the weaker-than-expected performance of the Services sector.

S&P Global commented: “July is seeing an unwelcome combination of slower economic growth, weaker job creation, gloomier business confidence and sticky inflation.”

According to S&P Global, the overall rate of output growth is consistent with GDP expanding at an annualized quarterly rate of approximately 1.5% at the start of the third quarter.

Treasury yields remained mostly flat after the release of the PMI reports. It looks that bond traders are not ready for big moves ahead of the Fed decision, which will be released on Wednesday.

U.S. Dollar Index continued to move higher and settled near the 101.25 level. The rebound continues ahead of the Fed meeting as traders prepare for another 25 bps rate hike.

Gold remained stuck near the $1960 level. Stronger dollar puts some pressure on gold markets, but the stabilization in Treasury yields serves as a positive catalyst for gold.

SP500 pulled back from session highs as traders reacted to the slowdown in the Services sector. At this point, the better-than-expected Manufacturing PMI report did not provide support to stocks.

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