Markit Services PMI: "Business activity stabilizes but demand conditions deteriorate"

The July US Services Purchasing Managers' Index conducted by Markit came in at 50.0 percent, up 2.1 from the final June estimate of 47.9. The Investing.com consensus was for 49.6 percent.

Here is the opening from the latest press release:

Commenting on the latest survey results, Chris Williamson, Chief Business Economist at IHS Markit, said:

“The service sector is showing welcome signs of stabilizing after the unprecedented downturn seen during the second quarter, but many companies continue to struggle with virus-related constraints, especially in states where social distancing restrictions have been tightened again.

“The US was the only major economy to see COVID-19 containment measures tighten again in July , and this is reflected in the data, with new business inflows falling at an increased rate to hint at the possible start of a doubledip in business activity.

“More encouragingly, businesses have on balance become more optimistic about recovery in the year ahead, and took on extra staff to ensure capacity is sufficient to meet future growth. However, whether this optimism can be sustained and result in faster growth will of course depend on infection rates falling.” [Press Release]

Here is a snapshot of the series since mid-2012.

Here is an overlay with the equivalent PMI survey conducted by the Institute for Supply Management, which they refer to as "Non-Manufacturing" (see our full article on this series here). Over its history, the ISM metric has been significantly the more volatile of the two.

The next chart uses a three-month moving average of the two rather volatile series to facilitate our understanding of the current trend. Since early in 2016, the ISM metric has shown stronger growth than the Markit counterpart.

Both series weakened since 2015 and saw an uptick in the latter half of 2016. The interim three-month moving average of the Markit Services index peaked in August of 2014. The ISM index peaked in September of 2015. The two were fairly closely aligned at the beginning of 2016, but they diverged early with the Markit index signaling noticeably weaker growth.