The ISM Services Index fell to the lowest level since May 2020 as eight of its ten subcomponents declined last month. The -4.6 point drop in the Business Activity subcomponent was the biggest driver of last month’s decline as conditions have softened for many companies in the service sector. The Prices Paid subcomponent also fell last month after having reached a record high reading, yet just 1% of survey respondents reported seeing lower prices compared to the historical average of 8%. So, while the ISM Services Index has fallen significantly from its high, it remains well above contraction territory (readings below 50) which will likely keep pressure on the Fed to maintain a path of monetary tightening.
