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U.S. manufacturing activity fell this month, while overall business activity rose to a 27-month high (Reuters, subscription).

What’s going on: The S&P Global Flash Manufacturing PMI declined to a seven-month low of 49.5 in July, down from 51.6 last month. However, the Global Flash U.S. Composite PMI, which measures the manufacturing and services sectors, rose to 55.0 in July from 54.8 in June, its highest reading since April 2022.

• Any reading above 50 indicates growth in the private sector.
• Reuters-polled economists had forecast the manufacturing index—“which accounts for 10.3% of the economy”—to be nearly unchanged at 51.7.
• Flash services PMI rose to 56.0, a high of more than two years, “confounding economists’ expectations for a drop to a reading of 55.0.”

What it means: “Fed officials have hinted that they may be preparing to begin to lower interest rates ahead, and markets are increasingly expecting the Fed to move to cut rates in September. The surveys paint a picture of a ‘Goldilocks’ economic backdrop, with growth matched by lower inflation, said Chris Williamson, an economist with S&P Global Market Intelligence,” according to Morningstar.