ISM Services PMI Preview: US services sector expected to accelerate in August

• The US ISM Services PMI is expected to improve a tad in August.
• The US services sector should remain in the expansionary territory.
• Speculation of two rate cuts from the Fed this year remains on the rise.

On Thursday, we’ll get the latest read on the US services sector when the Institute for Supply Management publishes its August Services PMI. Economists think the index will tick up to 51 from July’s 50.1. If they’re right, that would be the third month in a row the sector has grown, another reminder of its staying power and a small lift for confidence in the broader economy.

Still, the details from July weren’t all upbeat. Hiring momentum slipped, with the ISM Employment Index dropping back into contraction at 46.4. New orders also lost a bit of steam, easing to 50.3, which hints that demand may be cooling. Despite the steady growth, the rising Prices Paid Index to 69.9 highlights the persistent inflation pressures.

What to expect from the ISM Services PMI report?

Inflation in the US is still running hotter than the Fed’s 2% target, and that keeps policymakers uneasy, especially with the full effects of recent tariffs yet to filter through the economy.

The latest Personal Consumption Expenditures (PCE) report underscored this point. Core inflation, which strips out food and energy, rose 2.9% YoY in July, up from 2.8% in June and a touch higher than most forecasts. Headline PCE held steady at 2.6% annually, showing little sign of easing.

Against that backdrop, an ISM Services PMI that lands in line with expectations probably won’t move the US Dollar much. It would simply confirm the picture of an economy that’s still resilient but still wrestling with sticky price pressures. A softer-than-expected print, though, could shake confidence and see investors trim their USD holdings on fears that growth is losing momentum.

When will the ISM Services Purchasing Managers Index report be released, and how could it affect EUR/USD?

The Institute for Supply Management (ISM) will publish the Services Purchasing Managers Index (PMI) on Thursday at 14:00 GMT.

Pablo Piovano, Senior Analyst at FXStreet, notes that renewed selling pressure could first drag EUR/USD down to a weekly floor at 1.1574 (August 27), prior to its monthly low at 1.1391 (August 1). A break below the latter, he says, would put the late-May trough at 1.1210 back on the radar.

On the flip side, if the pair regains strength, it could retest the August ceiling at 1.1742 (August 22), seconded by the late-July high at 1.1788 (July 24), with the 2025 peak of 1.1830 not far behind. Clearing that zone, Piovano argues, could open the door to a run toward the psychologically important 1.2000 mark.

Overall, he adds, as long as EUR/USD stays above its 200-day Simple Moving Average at 1.1045, the broader constructive outlook for the pair remains intact.

Economic Indicator

ISM Services New Orders Index

The ISM Non-Manufacturing PMI released by the Institute for Supply Management (ISM) shows business conditions in the US non-manufacturing sector, taking into account expectations for future production, new orders, inventories, employment and deliveries. It is a significant indicator of the overall economic condition in the US. The ISM Services New Orders Index represents business sentiment regarding future market conditions. A result above 50 is positive (or bullish) for the USD.

Last release: Tue Aug 05, 2025 14:00

Frequency: Monthly

Actual: 50.3

Consensus: -

Previous: 51.3

Source: Institute for Supply Management

GDP FAQs

What is GDP and how is it recorded?

A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.

How does GDP influence currencies?

A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.

How does higher GDP impact the price of Gold?

When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.