Drop in US services PMI points to Q3 GDP contraction, S&P Global says

Services sector activity in the US slumped during the previous month with output falling at its fastest pace since May 2020, revised data for a survey of sector conditions revealed.

S&P Global's services sector Purchasing Managers' Index slipped from a reading of 52.7 for June to 47.3 in July (Preliminary 47.0).

New orders on the other hand returned to growth, after a marginal fall in June, but at a much slower pace than seen earlier in the year.

According to Chris Williamson, chief business economist at S&P Global Market Intelligence "the overall fall in output was the largest recorded since the global financial crisis and signals a strong likelihood that the economy will contract for a third consecutive quarter."

"[...] The flip side of deterioration in demand is a welcome alleviation of price pressures, which hint at a peaking of inflation."

Price pressures remained "historically elevated" the survey compiler said but did ease further.

Input and output charges rose at their slowest clip for five and 16 months, respectively.