The Kobeissi Letter(@KobeissiLetter):The US services sector is again signaling stagflation: ISM Services PMI rose +0.1 point in July, to 54.1, while the employment index dropped -3.6 points, to 47.4, the lowest reading since March and back in contraction territory. This is also the 2nd-lowest reading since October and marks the 4th monthly contraction over the last 5. At the same time, the prices paid index surged +2.6 points, to 70.3, near the highest since October 2022. Prices paid have now trended higher for over 2 years, rising +16.9 points since March 2024. In other words, the economy is increasingly under pressure from both rising prices and a weakening labor market. The threat of stagflation is intensifying.

2026.08.06 14:16

The US services sector is again signaling stagflation: ISM Services PMI rose +0.1 point in July, to 54.1, while the employment index dropped -3.6 points, to 47.4, the lowest reading since March and back in contraction territory. This is also the 2nd-lowest reading since October and marks the 4th monthly contraction over the last 5. At the same time, the prices paid index surged +2.6 points, to 70.3, near the highest since October 2022. Prices paid have now trended higher for over 2 years, rising +16.9 points since March 2024. In other words, the economy is increasingly under pressure from both rising prices and a weakening labor market. The threat of stagflation is intensifying.