US ISM non-manufacturing index likely to have remained stable in July

The US ISM non-manufacturing index is expected to have remained stable in July. The index had recovered in June to 56.5 from May’s 52.9. June’s index was the best reading since November 2015. Many measures of activity rebounded decently following declines registered in May. Therefore, the recovery in the composite indicated widespread gains.

Even if the level in June was above its three-month and six-month trailing averages, it was consistent with the average reading witnessed in the last year. This indicates stability in the underlying rate of services activity. In the mean time, the Dallas Fed’s service sector outlook indicated a drop in the revenue component to 10.3 from 15.6.

However, the corresponding revenue index set up by the Richmond Fed rose to 8 from 2, pointing towards a rebound in the services sector. These cross-currents imply that activity might have been comparatively stable last month, said Societe Generale in a research report.