Recent purchasing managers’ index (PMI) releases from two major economies delivered a positive signal for the global services sector. Spain’s HCOB Services PMI surged to 58.3 in July, well above the 55.3 forecast and up from 56.8 in June, marking the fastest expansion in over a year. The data, compiled from a survey of purchasing managers, showed sharp growth in business activity and new orders, driven by robust domestic demand and a strong tourism recovery. Employment also rose, although at a slightly slower pace, while input costs accelerated, hinting at persistent inflationary pressures.
Meanwhile, the Institute for Supply Management’s (ISM) Services PMI for the United States is projected to rebound to 51.0 from June’s contractionary 48.8, moving back above the 50-threshold that separates expansion from contraction. Economists expect the improvement to be underpinned by a recovery in new orders and business activity. The report, due on the first business day of August, will be closely scrutinized for clues on the resilience of the dominant US services sector and its implications for Federal Reserve policy. A strong reading could reinforce the case for keeping interest rates elevated, while a miss might fuel expectations of earlier rate cuts.
Both sets of data underscore the lingering strength of services across advanced economies, even as manufacturing struggles. For financial markets, the PMIs offer a timely gauge of economic momentum that can influence risk appetite. The euro and Spanish bond yields showed little immediate reaction to the Spain release, and a similar muted response is expected for the US data unless there is a significant surprise. However, the overall message of expanding services activity may support the narrative that developed economies are avoiding a sharp downturn, a scenario that typically benefits risk assets—including cryptocurrency—by sustaining demand and liquidity conditions.
