ISM Services PMI Steady at 54.0, Subcomponents Slide

The ISM non-manufacturing PMI for June printed at 54.0, even with the median estimate and down from 54.5 in May. The headline remained above 50 for the 42nd consecutive month. The underlying components all lost ground.

Business activity fell to 57.5 from 57.7. Employment dropped to 47.5 from 47.9, staying in contraction for the second month. New orders eased to 57.2 from 57.3. Prices paid slid to 70.0 from 71.3, a modest step down from the elevated levels seen through the first half of the year.

The dollar drifted lower in the immediate aftermath. EUR/USD pushed toward 1.0200 as the data offered no upside surprise to support the greenback. The in-line headline left the currency pair in a tight range ahead of Thursday's U.S. CPI release.

The ISM services survey covers a broad range of industries, from hospitality to finance. The softening in the employment reading is consistent with recent labor market data that has pointed to a cooling in hiring. New orders, a forward-looking component, also slipped.

The Federal Reserve next meets July 30-31. Markets currently price a roughly 60% chance of a 25-basis-point rate cut in September, with the December meeting fully priced for two cuts. The services data, alongside payrolls and CPI, will inform the path.

The headline held. Business activity, employment, new orders, and prices paid all retreated from May levels. U.S. CPI for June is due Thursday at 8:30 a.m. ET.