Breaking: US S&P Services PMI drops to 47 in July vs. 52.6 expected

Business activity in the US service sector contracted in early July with S&P Global Services PMI dropping to 47 from 52.7 in June. This reading came in much weaker than the market expectation of 52.6.

Further details of the publication revealed that the Manufacturing PMI edged lower to 52.3 from 52.7 and the Composite PMI slumped to 47.5 from 52.3.

Commenting on the data, "the preliminary PMI data for July point to a worrying deterioration in the economy," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

"Excluding pandemic lockdown months, output is falling at a rate not seen since 2009 amid the global financial crisis, with the survey data indicative of GDP falling at an annualised rate of approximately 1%," Williamson further elaborated. "Manufacturing has stalled and the service sector’s rebound from the pandemic has gone into reverse, as the tailwind of pent-up demand has been overcome by the rising cost of living, higher interest rates and growing gloom about the economic outlook." 

Market reaction

The dollar came under strong selling pressure after this report and the US Dollar Index was last seen losing 0.3% on the day at 106.30.