The service side of the economy kept humming along in July. The ISM Services PMI came in at 54.1%, a slight uptick from June and the 25th straight month of growth for the sector. This index tracks everything from retailers to banks to shipping companies, and a reading above 50 means more businesses are expanding than shrinking. Business activity jumped to its highest level in five months, and thirteen of the eighteen industries tracked reported growth, a sign that consumers and businesses are still willing to spend.
The labor market sent a more mixed signal by week’s end. Initial jobless claims ticked up slightly to 199,000 for the week ending August 1, still a historically low number that points to limited layoffs. But Friday’s official jobs report was the bigger surprise. Employers actually cut 23,000 jobs in July, well short of the roughly 80,000 gain economists had expected, and hiring for May and June was revised down by a combined 103,000 jobs. The unemployment rate still edged down to 4.1% from 4.2%, though that was mostly because fewer people were working or looking for work rather than a sign of strength. Wage growth also cooled, with pay up 3.2% over the past year, the slowest pace since 2021.
It was a busy week for corporate earnings again. Palantir delivered a blockbuster quarter, with shares jumping as the company raised its full-year guidance on strong AI-related demand. AMD beat Wall Street’s estimates too, though its stock pulled back on investor questions about future demand. Elsewhere, Disney and Eli Lilly both impressed with their results, helping push major stock indexes to fresh highs during the week. Overall, the majority of earnings have beaten analysts estimates, further raising the bar for the balance of the year. I suspect as we move closer to the mid-term elections, more volatility will likely creep back into our markets as the political speculation rises and the pressure on companies to deliver and sustain the economy will heighten.
Interesting to Note
Look up after dark over the next week or two — the Perseid meteor shower, one of the best sky shows of the year, is ramping up toward its peak. On a clear night, it’s one of the simplest ways to unplug for a few minutes and enjoy the beauty around us.
Looking Ahead
- Consumer Price Index (CPI) for July, due Wednesday, August 12
- Producer Price Index (PPI) for July, due Thursday, August 14
- Retail Sales for July, due Friday, August 15
- Continued Fed commentary as markets weigh the odds of a September rate move
We are at the peak of summer travel and downtime. I hope you are able to relax and have some fun. We are in the final two week countdown in our house before 2 of our boys head back to college. My grocery bill will welcome the slowdown in spending!!
Written by: Chris Wasson, CFP®
Sources
ISM Services PMI Report — July 2026
US Initial Jobless Claims — FXStreet
BLS Employment Situation — July 2026
US Nonfarm Payrolls Fall in July — Reuters via Yahoo Finance
Earnings Calendar and Analysis — Kiplinger
August Kicks Off: Palantir, AMD, SanDisk Earnings and NFP Jobs Report — TradingKey
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