ISM Services PMI Barely Hangs On to Expansion | SchiffGold

The American services engine came more than one point under expectations but stayed in the green by the slimmest of margins last month, even as price pressures roared back to life and trade frictions deepened. The Institute for Supply Management’s Services Purchasing Managers’ Index (PMI) came in at 50.1 for July, just a whisker above the 50-point line that separates growth from contraction. While that technically marks a second straight month of expansion, the reading slipped 0.7 percentage point from June and now sits more than two points below the 12-month average. Markets greeted the tepid data nervously—especially after record-setting $3,383 per-ounce print for gold, a classic barometer of distrust in fiat stability.

Digging beneath the headline, the details skew soft. Business Activity cooled to 52.6, New Orders eased to 50.3, and the Employment Index shrank to 46.4—its fourth contraction in five months. Manufacturing looks even shakier: July’s factory PMI dropped to 48.0, extending a year-long stretch of sub-50 readings. Survey respondents blamed “higher tariffs” for escalating input costs and for shelving capital projects—a reminder that when politicians weaponize trade, real production often gets caught in the crossfire.

Source: ismworld.org

Supply lines are showing new strains as well. Supplier Deliveries rose to 51.0 for an eighth consecutive month, signaling slower freight times amid mounting port and rail congestion. Inventories remain in modest expansion, yet the Backlog of Orders has now contracted for five straight months, hinting that demand could be faltering faster than warehouses can adjust. Internationally, both export and import gauges flipped from growth to contraction in July, underscoring how tit-for-tat levies are chilling cross-border commerce.

None of that compares to the heat in the Prices Index, which jumped to 69.9—its hottest print since October 2022 and the eighth straight month above 60. Tariffs get part of the blame, but persistent monetary largesse also plays a role; when new dollars chase fewer goods, stickers rise. It’s no coincidence that gold, the ultimate store of value for thousands of years, now changes hands above $3,300 an ounce while mainstream pundits keep insisting inflation is “cooling.” Investors appear unconvinced.

While eleven service industries—including Transportation & Warehousing and Wholesale Trade—managed growth in July, seven sectors such as Accommodation & Food Services and Construction slid into contraction. With labor demand weakening, costs climbing, and new trade barriers hitting U.S. shores, the razor-thin 50.1 PMI offers little comfort.

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