The S&P Global US Composite Purchasing Managers' Index came in at 55.1 in July, up from 52.9 in June a marked jump in business activity.

The acceleration in the pace of growth was centered on the service sector as manufacturing production rose at a softer pace, the report said. There was an uptick in the pace of new orders, employment rose modestly, and inflation spiked as selling prices sped up at the fastest pace since August 2022.

The US Services PMI Business Activity Index recorded 55.7 in July, picking up from 52.9 in June, and beating expectations of 55.2 in the Econoday survey of forecasters.
The report that businesses responded to higher workloads by hiring more staff, but not in great numbers. Meanwhile, tariffs continue to fuel inflationary pressures, leading to faster increases in both input costs and output prices.

Tariffs also had a clear impact on price pressures, according to anecdotal evidence, it said. Companies widely linked the latest increase in input costs to the effects of tariffs, while also mentioning higher salaries. Input prices rose sharply, with the pace of inflation accelerating from June and coming in above the series average.

It also noted a quicker and steep increase in the pace of output price inflation in July. Panelists reported passing on tariff related rises in input costs to their customers. Here too, the increase was marked in the context of historical data, the report said.

No change from the flash at a robust 54.6 is the call for the July composite final, up from 52.9 in the June final. No change is expected from the flash at 55.2 for services versus 52.9 in the June final.

US Services Purchasing Managers' Index (PMI) is based on monthly questionnaire surveys collected from over 400 U.S. companies which provide a leading indication of what is happening in the private sector services economy. It is seasonally adjusted and is calculated from seven components, including New Business, Employment and Business Expectations.

Investors need to keep their fingers on the pulse of the economy because it indicates how various types of investments will perform. The Markit Services PMI provides advance insight into the services sector, which gives investors a better understanding of business conditions and valuable information about the economic backdrop of various markets. The stock market likes to see healthy economic growth which generally 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. The PMI data are also used by many Central Banks to help make interest rate decisions.

The IHS Markit Services Flash data give a detailed look at the services sector, the pace of growth and the direction of this sector. Since the service sector accounts for more than three-quarters of U.S. GDP, this report has a significant influence on the markets. In addition, its sub-indexes provide a picture of new business, employment, business expectations and prices.