The services index is barely above contraction. Prices are another matter.
Please consider the July 2025 Services ISM® Report On Business® emphasis mine.
Economic activity in the services sector grew in July for the second consecutive month, say the nation’s purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® indicated expansion at 50.1 percent, above the 50-percent breakeven point for the 12th time in the last 13 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 50.1 percent, 0.7 percentage point lower than the June figure of 50.8 percent but in expansion territory for the second month in a row. The Business Activity Index remained in expansion in July, registering 52.6 percent, 1.6 percentage points lower than the reading of 54.2 percent recorded in June. This index has not been in contraction territory since May 2020. The New Orders Index also remained in expansion territory in July, recording a reading of 50.3 percent, a drop of 1 percentage point from the June figure of 51.3 percent. The Employment Index was in contraction territory for the second month in a row and the fourth time in the last five months; the reading of 46.4 percent is 0.8 percentage point lower than the 47.2 percent recorded in June.
“The Prices Index registered 69.9 percent in July, a 2.4-percentage point increase from June’s reading of 67.5 percent. The index has exceeded 60 percent for eight straight months, with July’s reading the highest since October 2022 (70.7 percent).
Miller continues, “July’s PMI® level continues to reflect slow growth, and survey respondents indicated that seasonal and weather factors had negative impacts on business. The Employment Index’s continued contraction and faster expansion of the Prices Index are worrisome developments. The New Exports (a 3.2-percentage point decrease in July) and Imports (a 5.8-point drop) indexes, which both moved from expansion to contraction, provided signals that tariff tensions are impacting global trade.
What Respondents Are Saying
- “Anticipation of the final tariff impacts is resulting in delayed planning for next fiscal year purchases.” [Accommodation & Food Services]
- “Higher tariffs are increasing the cost of imported feed ingredients and trace minerals for livestock and poultry feeds. Business and customer concerns over additional cost risk due to additional tariffs.” [Agriculture, Forestry, Fishing & Hunting]
- “Trade uncertainty causing client reevaluation of feasibility for projects in certain sectors, resulting in some delays or cancellations. Public-funded jobs experiencing pullbacks.” [Construction]
- “Summer break for students greatly reduces demand on campus.” [Educational Services]
- “Steady business activity.” [Finance & Insurance]
- “Tariffs are causing additional costs as we continue to purchase equipment and supplies. Though we need to continue with these purchases, the cost is significant enough that we are postponing other projects to accommodate these cost changes.” [Health Care & Social Assistance]
- “Extra purchasing to head off tariffs has leveled off. Expecting decreases in activity in the second half of 2025.” [Mining]
- “Economic uncertainty remains the dominant theme. However, the tariff talk has turned out to be much more bluster than actual policy, and businesses have seemed to tune out the noise. The outlook continues to look incrementally positive.” [Real Estate, Rental & Leasing]
- “Retail results are solid — a little soft before and during Fourth of July week, but then a rebound. We see no reason to believe this won’t continue for the near term.” [Retail Trade]
- “Our business activity is flat. We are not trending up or down. Tariffs are now starting to show up in pricing, and we are seeing increases across the board.” [Transportation & Warehousing]
Diffusion Indexes
ISM is a diffusion index with numbers above 50 indicating expansion and below 50 contraction.
A weakness of diffusion indexes is direction matters more than amount. For example, a business hiring 2 people would offset a business firing 300.
Mish Thoughts
Prices are soaring as backlog of orders collapse, imports collapse, export orders contract, employment dives, and the overall index is barely above contraction.
This smacks of stagflation.
But I have the cure. All we have to do is ask Trump if prices are up 98 straight months and if tariffs are a problem.
He will have answers we all want to hear.
Things That Can’t Possibly Matter
July 31, 2025: No Improvement in the Fed’s Preferred Measure of Inflation for 8 Months
That’s an obvious lie, perpetrated by the BLS to make Trump look bad.
August 1: Payroll Disaster, Jobs Rise 73,000 but Massive Negative Revisions
That is also a lie, and besides Powell and Biden are to blame.
August 2, 2025: Senate OKs a More than Requested $852 Billion in Defense Spending
Bigger deficits? Who care?
August 3, 2025: Trump Puts 93.5 Percent Tariff on Graphite Needed for EV Batteries
Pay more? Doesn’t matter.
July 31, 2025: Real Disposable Personal Income Flat in June, Inflation Eats All Wage Gains
That’s another big lie, this time perpetrated by the folks at the BEA. The BEA is in cahoots with the BLS.
We need to fire them all and depend on Truth Social for the news.
Any questions?
It took over a year before the market cracked under the weight of Trumps last tariff disaster and the real inflation did not kick in until covid liquidity came pouring in and allowed for profit margins to be restored and even grow.
My guess is that the typical October profit taking gets stronger than normal and we see a 20-25% market correction (at the worst).
As we know the Fed can always pour on another flood of liquidity to keep the partiers around the punch bowl.
The American farmers are going to take a massive screwing this time and will need $50 billion in bailouts this time.
Helicopter (whoever Trump puts in) will come to the rescue.
Interesting times!
There are now serious inflationary pressures in the pipeline for the next few months; I think the best leading indicator for those pressures is the S&P output price PMI. Since 2020, this indicator had an uncanny ability to lead the movements in the CPI. No fun to be at the Fed when a politician like Trump unleashes two negative supply shocks on the economy at the same time.
There can’t be any inflation because Trump says so. Heck, he said that he has already reduced the price of pharmaceuticals by 1500%.
Plus he sent out 17 letters this week to big pharma demanding that they lower drug prices EVEN MORE!
Soon, pharmaceuticals will be 3000% cheaper!
Too bad I don’t use any. I could use the money.
He is also demanding that US companies stop raising their prices and absorb the higher tariffs that other countries are paying to US customs.
The Services PMI® indicated expansion at 50.1 percent issued today by Steve Miller, CPSM.
Be careful with your statistics or else.
Your behaviour won’t be tolerated.
Your fate is only 0.1 away from ——-.
Thank you for your attention to this matter.
And yet the stock market simply chugs away with mystery black pool money so it’s all good!
History is going to look back at this period with astonishment. Here we have the greatest country in the world, king of finance, militarily unmatched, the top in science and education. All thrown away in record time because nobody wanted to fix what wasn’t broken. By broken of course I mean “immediately apparent as beyond all hope of repair”.
It’s like watching a guy laugh about his foundation cracking for decades until his house comes down on him in his sleep. He’ll then tell you from his hospital bed that he never saw any warning signs because “those cracks were there for as long as I can remember!”
In the same way that the services sector is lagging in terms of tariffs affecting it, so is the stock market also lagging in terms of tariffs affecting things.
The other thing to remember about the stock market is that there is virtually no other game in town (minus gold/crypto) in terms of putting your money somewhere. Bonds are captive to interest rates and Trump is trying to further suppress those (and thus returns) and the real estate market is already topped out. Every month a lot of money is forced into the markets via 401Ks and pension plans…
Hookers. I here that cartels make more money sex trafficking than from drugs.
Oldest profession and primary free enterprise in action! 😉
At this point, I’m going to have to start putting into crypto because it’s the only thing that’s not totally sunk if the us goes under.
Don’t forget high quality gold mining stocks that pay solid dividends.
Bought AEM at $46 two years ago… It simply keeps getting better with every quarter and the dividend should be going up again soon.
Every country on earth is printing currency like crazy and global inflation is quite impressive…
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Once “great” country. Honestly the winner defines history and there is no proof the UNITED STATES OF AMERICA is or ever was ” The greatest country in the world”.
By modern metrics like education, health/health care, IQ, so on we pretty much suck. And are in swift decline.
We may hit the trifecta of civil war, world war and environmental disaster before this year ends.
Most likely just two of the above.
Once again, Vance replaces Trump in 2026. Trump has political issues and the idea has been floated he has ‘Venous circulation” issues or his knees are going ( maybe something else with the legs).
Vance gets two and a half terms then. Either MTG or Tulsi for VP. Tulsi has stepped up her game to appeal/appease the base
Vance has all the points to check off, not racist, military, poor boy with druggie mommy issues, ties with the “Paypal Mafia” as Webb calls them.
MTG and Tulsi have both been jockeying for the return of the MAGA base.
Either way we get war and an economic collapse to rebuild with a China like Social Credit score.
Vance tries to come across as a moderate and seems to show, he is a politician, real anger on certain points.
Dems have no one for 2028. Anyone truly think AOC, Schumer or Bernie excite the base when Vance will give the same base most of what they want.
Give US twenty years and we are where Russia is now. But by then BRICS+ are already in control.
At present their game is to remove or nullify the US, Israel and the EU. EU is starting to go full on Palestinian state to circumvent their upcoming political power down grade.
it is like watching a magic trick unfold, you know how it works but need to see it play out for effect.
As I keep warning environmental disaster is a major x factor right now. Too many activities from Mother nature and the Sun.
A single Carrington event could wipe out everyone’s plans.
If someone sees a different set of factors with a different outcome please share it.
Thanks
I agree with most of this but Vance and the GOP have no dreams of winning either in midterms or the next presidency. People are overwhelmingly mad with this and will only get moreso as the GOP screws up. Doesn’t matter who Dems run, they’ll win just on the GOP’s foot shooting alone with everyone they needed votes from. Latinos aren’t voting red ever again, the working class certainly won’t be turning out for him, and veterans have been severely screwed over.
Trump only won because Biden refused to acknowledge trouble with inflation, that was it. For their stupidity, red states are now even more broke and investment is drying up. People like Sanders and Pritzker or whatever have actual track records and are promising what people now overwhelmingly want: accountability. A whole lot of which is going to be needed to clean up after this patently fascist (and laughably bad at it) administration’s attempts to extort every single market, population, and ally.
The GOP refused to stand on its promises to end market insanity, checks to countries like Israel and Ukraine, forever wars in the desert, and common decency. All so Trump and his vandals can steal everything that’s not nailed down and hope they don’t get in trouble for it.
As for a civil war, look outside. MAGA doesn’t have a base under 70 that’s not either geographically isolated or too outnumbered and stupid to do much. Any actual civil conflict and Trump will find the cards aren’t in his favor as global capital backs whoever is the most steady establishment alternative.
BRICS is a laughable thing too though. China isn’t going to be sharing with the world’s current biggest loser (Russia), their poo smeared arch rivals (India), or anyone else for that matter. If anything, Russia’s demise is making Europe a player again as Germany gets up and puts its pants back on. Expect to see America take second fiddle to Asia and Europe. As both have started to become way more socially advanced while we struggle to answer the question: “is slavery bad??”
The world isn’t ending, the 20th century post WW2 order is.
What are you, Ukrainian?
No, I’m just literate enough to know that taking 1 million + casualties and inflicting about 250k is not a winning calculation. Russians decided to fight like it was WW2 against modern weapons and got cut down like Zulus, now they’re begging freaking North Korea for help. Nothing about that screams victory to anyone but a vatnik.
OH My! The sky is falling…
What a total load of shit.
This country has great momentum and will recover from the Trumper tantrum and a new leader will come forward to tackle the real problems of this generation.
There will always be Chicken Littles in this world.
I’m not one of them. 😉
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Entropy is here!
I love it when people say that Tariffs won’t affect the service sector. They assume that service sector people don’t eat and don’t buy goods. 🙂
Japanese old folk bots.
doesn’t high prices paid raise the overall index largely on the theory that price pressure should be driven by robust demand? That would usually be true, but given we know this is tariff related a more accurate index would probably omit prices paid. Am I wrong there? And I’m betting doing so puts the index in contraction.
Services PMI = (production + new orders + employment + deliveries) / 4 = 50.075
Thanks! Thats odd that they report prices paid but don’t actually include it in the composite index.
Why? “The core CPI is constructed on a monthly basis by the Bureau of Labor Statistics. In contrast to the median and trimmed-mean measures, the core CPI associates the noise in an aggregate price index with particular items—food and energy—and excludes their prices from the CPI.”
Noise? The car lot told me they no longer use “sales person” to describe product representatives.
I enjoy these two separate sections from the exceptional Aussie tv series RAKE. Captures modern society so well.
“Fuzz Greene: Legal stunts. Herewith, forthwith, pertaining to but not inclusive of. This is how people control us, isn’t it? make it all so mysterious, the rest of us don’t understand.
Cleaver Greene: Yes. It’s why law and religion were in Latin for centuries, but then they realized they could make English just as incomprehensible as a dead language.
Fuzz Greene: So, if I understand you correctly, you make a living strangling words so a jury doesn’t know which way is up.
Cleaver Greene: Yeah. We also get to wear wigs.
“Cleaver Greene: Let’s cut to the chase, Lawrence. What the hell possessed you to bust into this forum?
Lawrence Fenton: What these so-called important people are doing with words. The way they use language to actually hide what they mean. It’s a form of corruption. The writer, Don Watson, calls them ‘weasel words’, where corporations and governments complicate what they say so much that there is no longer any accountability or integrity. And once we stop believing in what is being said, once language loses its power to connect us, civilization is finished.””
Funny after the Rake quote I found this on ZH.
Just a sample quote, read the rest and weep.
( There is/was an excellent documentary series called all Watched Over By Machines Of Loving Grace, or try Black Mirror, Brit ones good US kind of sucked.)
DARPA’s Theory Of Mind Warfare
2. Tailored Messaging and Adaptive Communication Insights from these platforms allowed authorities to: