Investing.com – Activity in the U.S. service sector unexpectedly fell in July, according to preliminary data released on Monday.
In a report, market research group Markit said that its flash services purchasing managers’ index (PMI) fell to 50.9 in July, from the prior month’s reading of 51.4.
Analysts had expected an increase to 52.0 this month.
On the index, a reading above 50.0 indicates expansion, below indicates contraction.
Services make up approximately 80% of the U.S. economy which makes the data key for interpreting growth.
According to the report, the growth of activity hit a five-month low in July, though on the upside, new orders and employment rose again while business sentiment registered a significant improvement.
“The U.S. service sector remained stuck in a low gear at the start of the third quarter of 2016, with growth of activity remaining subdued amid a slower rise in new business,” Markit senior economist Andrew Harker commented.
“This is particularly disappointing given the decent numbers posted by the manufacturing sector last week,” he added.
Harker did note that the rebound in business confidence from June’s low was an encouraging sign.
Following the report, EUR/USD was trading at 1.1002 from around 1.0994 ahead of the release of the data, GBP/USD was at 1.3166 from 1.3127 earlier, while USD/JPY was at 104.56 compared to 104.42 earlier.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 97.03, compared to 97.12 ahead of the report.
Meanwhile, U.S. stocks were trading slightly higher after the open. The Dow 30 gained 19 points or 0.10%, the S&P 500 advanced 5 points or 0.22%, while the tech-heavy NasdaqComposite traded up 20 points or 0.38%.
Elsewhere, in the commodities market, gold futures traded at $1,328.00 a troy ounce, compared to $1,327.25 ahead of the data, while crude oil traded at $43.01 a barrel from $42.98 earlier.