Fra ISM
Services PMI® at 51.4%
July 2024 Services ISM® Report On Business®
Business Activity Index at 54.5%
New Orders Index at 52.4%
Employment Index at 51.1%
Supplier Deliveries Index at 47.6%
(Tempe, Arizona) — Economic activity in the services sector expanded in July, a trend that has been interrupted only three times — though twice in the last four months — since early in the coronavirus pandemic, say the nation’s purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® registered 51.4 percent, indicating sector expansion for the 47th time in 50 months.
The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In July, the Services PMI® registered 51.4 percent, 2.6 percentage points higher than June’s figure of 48.8 percent. The reading in July marked the fifth time the composite index has been in expansion territory in 2024. Before April, the services sector grew for 15 straight months following a Services PMI® reading of 49 percent in December 2022; the last contraction before that was in May 2020 (45.4 percent). The Business Activity Index registered 54.5 percent in July, which is 4.9 percentage points higher than the 49.6 percent recorded in June and a return to expansion after one month of contraction. The New Orders Index expanded to 52.4 percent in July, 5.1 percentage points higher than June’s figure of 47.3 percent; however, the index’s current reading is its fourth-lowest since early in the pandemic. The Employment Index expanded for just the second time in 2024; the reading of 51.1 percent is a 5-percentage point increase compared to the 46.1 percent recorded in June.
“The Supplier Deliveries Index registered 47.6 percent, 4.6 percentage points lower than the 52.2 percent recorded in June. The index returned to contraction territory — indicating faster supplier delivery performance — in July after two months in ‘slower’ territory. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)
“The Prices Index registered 57 percent in July, a 0.7-percentage point increase from June’s reading of 56.3 percent. The Inventories Index contracted for the second consecutive month in July, registering 49.8 percent, an increase of 6.9 percentage points from June’s figure of 42.9 percent. The Inventory Sentiment Index (63.2 percent, down 0.9 percentage point from June’s reading of 64.1 percent) expanded for the 15th consecutive month. The Backlog of Orders Index returned to expansion territory for the fifth time in 2024, registering 50.6 percent in July, a 6.6-percentage point increase compared to the June reading of 44 percent.
“Ten industries reported growth in July. The Services PMI® has expanded in 17 of the last 19 months dating back to January 2023, and the July reading is only 0.9 percentage point lower than the average of 52.3 percent over that period of time. Also, the PMI® has not recorded back-to-back months in contraction since April and May 2020, another indication of sustained growth for the sector.”
Miller continues, “The increase in the composite index in July is a result of an average increase of 5 percentage points for the Business Activity, New Orders, and Employment indexes, offset by the 4.6-point drop in the Supplier Deliveries Index. The last time Supplier Deliveries was in contraction (faster) territory while the other three indexes registered expansion was in November 2023. Survey respondents again reported that increased costs are impacting their businesses, with generally positive commentary on business activity being flat or expanding gradually. Comments continued to express a wait-and-see attitude regarding the upcoming presidential election, with one respondent expressing concern over potential increases in tariffs. Many panelists noted a return to more stable supply chain performance, albeit with higher costs.”
INDUSTRY PERFORMANCE
The 10 services industries reporting growth in July — listed in order — are: Arts, Entertainment & Recreation; Accommodation & Food Services; Mining; Construction; Management of Companies & Support Services; Transportation & Warehousing; Public Administration; Finance & Insurance; Health Care & Social Assistance; and Utilities. The eight industries reporting a decrease in the month of July — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Wholesale Trade; Retail Trade; Professional, Scientific & Technical Services; Information; Educational Services; and Other Services.
WHAT RESPONDENTS ARE SAYING
- “As was the case in June, restaurant sales and traffic remain flat compared to last year. A heat wave in California, rising gas prices and general angst about menu prices have tempered consumer demand.” [Accommodation & Food Services]
- “Business in 2024 has been steady. The length of our busy season — typically March to mid-June — has extended into mid-July. Volumes have not increased considerably, but the consistency of shipments has been a benefit to our supply chain.” [Agriculture, Forestry, Fishing & Hunting]
- “Business is strong in our industry, water treatment. Prices have been fairly flat, but there’s some pressure from increasing costs.” [Construction]
- “While interest rates on home loans continue to change dramatically at times, the number of members requesting loans has remained relatively steady.” [Finance & Insurance]
- “Inflation markups have been issued from suppliers.” [Health Care & Social Assistance]
- “Business conditions seem to be stable at this time.” [Educational Services]
- “Our main market is the U.S. Due to the election year, new projects are not moving forward as expected. Many of our customers are waiting for the election results to develop new projects.” [Information]
- “High interest rates continue to affect long-term buying decisions.” [Professional, Scientific & Technical Services]
- “Cost of construction services continues to be above predicted budget. Materials deliveries are reliably on time.” [Public Administration]
- “High food costs are having an impact on customer demand and resulting in flat business overall. Business activity stable. Supplier costs also flat in general.” [Wholesale Trade]
ISM® SERVICES SURVEY RESULTS AT A GLANCE COMPARISON OF ISM® SERVICES AND ISM® MANUFACTURING SURVEYS*
JULY 2024
| Services PMI® | Manufacturing PMI® | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Index | Series Index Jul | Series Index Jun | Percent Point Change | Direction | Rate of Change | Trend** (Months) | Series Index Jul | Series Index Jun | Percent Point Change |
| Services PMI® | 51.4 | 48.8 | +2.6 | Growing | From Contracting | 1 | 46.8 | 48.5 | -1.7 |
| Business Activity/ Production | 54.5 | 49.6 | +4.9 | Growing | From Contracting | 1 | 45.9 | 48.5 | -2.6 |
| New Orders | 52.4 | 47.3 | +5.1 | Growing | From Contracting | 1 | 47.4 | 49.3 | -1.9 |
| Employment | 51.1 | 46.1 | +5.0 | Growing | From Contracting | 1 | 43.4 | 49.3 | -5.9 |
| Supplier Deliveries | 47.6 | 52.2 | -4.6 | Faster | From Slowing | 1 | 52.6 | 49.8 | +2.8 |
| Inventories | 49.8 | 42.9 | +6.9 | Contracting | Slower | 2 | 44.5 | 45.4 | -0.9 |
| Prices | 57.0 | 56.3 | +0.7 | Increasing | Faster | 86 | 52.9 | 52.1 | +0.8 |
| Backlog of Orders | 50.6 | 44.0 | +6.6 | Growing | From Contracting | 1 | 41.7 | 41.7 | 0.0 |
| New Export Orders | 58.5 | 51.7 | +6.8 | Growing | Faster | 3 | 49.0 | 48.8 | +0.2 |
| Imports | 53.3 | 44.0 | +9.3 | Growing | From Contracting | 1 | 48.6 | 48.5 | +0.1 |
| Inventory Sentiment | 63.2 | 64.1 | -0.9 | Too High | Slower | 15 | N/A | N/A | N/A |
| Customers’ Inventories | N/A | N/A | N/A | N/A | N/A | N/A | 45.8 | 47.4 | -1.6 |
| Overall Economy | Growing | From Contracting | 1 | ||||||
| Services Sector | Growing | From Contracting | 1 | ||||||
