U.S. Services Sector Expands for 25th Straight Month Amid Mixed Employment Signals
Event summary
- July 2026 Services PMI® registered at 54.1%, up 0.1 percentage point from June.
- Business Activity Index surged to 59.1%, its second-highest reading since May 2024.
- Employment Index fell back into contraction territory at 47.4% after one month of expansion.
- Prices Index hit 70.3%, the fourth time above 70% in five months, indicating persistent inflationary pressures.
The big picture
The U.S. services sector continues to show resilience with the 25th consecutive month of expansion, despite mixed signals in employment. The persistent rise in prices, particularly for petroleum-related products, suggests ongoing inflationary pressures that could impact profitability. The sector's ability to navigate these challenges will be critical in maintaining its growth trajectory amid broader economic uncertainties.
What we're watching
- Employment Trends
- Whether the services sector can sustain employment growth amid persistent contraction signals.
- Inflation Impact
- How rising prices for commodities like petroleum and plastics will affect service sector profitability.
- Supply Chain Resilience
- The pace at which supply chain bottlenecks ease, particularly for technical labor and memory components.