|Composite - Level||51.5||51.5|
|Services - Level||51.2||51.8|
July service PMI reading was 51.2, little changed from 51.8 in June which was the highest reading since September 2014. New business growth accelerated to a 26-month peak, supporting further expansions in activity and employment. Meanwhile, both input and output prices rose at sharper rates in comparison to the prior month. According to respondents, success in gaining new contracts and a rise in sales volumes led to the latest expansion.
The composite PMI which measures both manufacturing and services was unchanged at 51.5. Manufacturers increased at the quickest rate since February. A rise in new work at Japanese services firms helped to boost activity growth in July. In fact, the latest expansion in new orders was the strongest since May 2013. As a result of expansions in both activity and incoming new work, pressure on capacity was recorded at Japanese services companies in July.
Responding to activity and new order growth, service sector providers hired additional staff in July. Firms linked greater staffing levels to business expansions and the belief that activity will increase in the future. However, the rate of job creation in July was marginal. Similarly, employment levels rose at manufacturers, with modest growth the best of the year so far.
Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month. For each of the indicators the 'Report' shows the percentage reporting each response, the net difference between the number of higher/better responses and lower/worse responses, and the 'diffusion' index. This index is the sum of the positive responses plus a half of those responding 'the same'.
Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.
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