A 49.5 print would keep the ISM non-manufacturing index, as tends to be the case, above the Markit services PMI of 46.7, but below the neutral 50. The Philly and Richmond Fed’s services indices were still negative in June, with the former getting close to neutral, but the latter less so.
We expect business activity to lead the ISM non-manufacturing improvement, rising to 50.0 from 41.0 with help from supportive seasonal adjustments. We also expect new orders to rise to 48.0 from 41.9 and employment to 45.0 from 31.8. Delivery times, however, are likely to slow from May’s still-inflated mark of 67.0 (we see this sub-index coming in at 55.0 on the month). While prices paid do not contribute to the composite, we expect gasoline to lift the index to a 5-month high of 57.5 from 55.6 in May.