US services sector signals stagflation with rising prices, weak employment index

The US services sector is showing signs of stagflation, highlighted by rising prices and a weakening employment index, according to a report by @KobeissiLetter. Stagflation, characterized by stagnant economic growth and high inflation, is suggested by the recent data on the services sector, which accounts for a significant portion of the US economy. The ISM Services PMI, a key measure of economic activity, showed elevated prices and a shrinking employment index, consistent with past patterns observed earlier in the year. These developments come amid broader inflation pressures, with core CPI remaining elevated as reported by the Treasury and the Federal Reserve. Key Takeaways Recent data from the US services sector appears to suggest stagflation, with high prices and weakening employment indices. Market pricing indicates participants are considering these developments as a possible driver of elevated inflation in coming months. The ISM Services PMI’s current readings are consistent with previous stagflationary indicators observed earlier in 2026. What to Watch Market participants will closely monitor the upcoming Bureau of Labor Statistics (BLS) CPI release for July 2026, as it cou...