ISM Services Calm Financial Markets, Showing Stability in the Sector

ISM services for July, which showed that the sector is in robust condition, helped the markets recover after a pessimistic start today.

Skerdian Meta•Monday, August 5, 2024•2 min read

The US ISM services data for July, which showed that the sector is in robust condition, helped the markets recover after a particularly pessimistic start today. Following the worst day for the Japanese stock market in nearly forty years, US traders stepped in to stabilize the market as investors grappled with the unwinding of the carry trade and rapid deleveraging in an uncertain economic climate.

US Services remain robust

Some US economic indicators revealed a stable services sector in contrast to the struggling manufacturing sector, contributing to today’s market recovery. Adding to the calm, the Fed’s Goolsbee projected confidence and steady motion by the FED. However the selloff in stock markets has resumed in late US trading, but Gold and the safe haven currencies are not moving much.

US ISM Services Report for July

Headline Index: 51.4 points vs. 51.0 points expected (June was 48.8 points)
Business Activity: 54.5 points vs. 49.6 points prior
Employment: 51.1 points vs. 46.1 points prior
New Orders: 52.4 points vs. 47.3 points prior
Prices Paid: 57.0 points vs. 56.3 points prior
Supplier Deliveries: 47.6 points vs. 52.2 points prior
Inventories: 49.8 points vs. 42.9 points prior
Backlog of Orders: 50.6 points vs. 44.0 points prior
New Export Orders: 58.5 points vs. 51.7 points prior
Imports: 53.3 points vs. 44.0 points prior
Inventory Sentiment: 63.2 points vs. 64.1 points prior

Key Highlights

Business Activity: Rebounded to expansion territory.
New Orders: Recovered, indicating stronger demand.
Employment: Grew for only the second time in 2024.
Supplier Deliveries: Accelerated, with the index dropping to 47.6 points.

Ten out of eighteen industries in this sector experienced growth last month, with arts and entertainment, along with lodging and food services, showing the strongest performance. This indicates that customers are paying for leisure as well, however it is summer time. Feedback from businesses indicated a cautious yet steady corporate environment, with some concerns about inflation and the upcoming election. Last month, it seemed like this index might decline, but it may have performed a deceptive turnaround. The Federal Reserve is likely to interpret this as evidence supporting its “soft landing” narrative and will continue to resist aggressive rate-cutting pressures.

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.