Today the July ISM Services or non-Manufacturing report came in at a strong 54.3 up from the 53.8 in June and easily above estimates that expected a decline. The Business Activity index remained a robust 57.4 showing that growth is likely above the headline numbers that tend to be sentiment based. New Orders rose to 56 and Inventories and Prices Paid relaxed from levels that were too high last month.
All in all it was a very solid report and market is slowly coming to realize that we're likely headed towards a strong recovery in the 2H versus the double dip. As shown in the table below, Business Activity has consistently been above the headline ISM number. Its interesting to note how few businesses expect lower activity even though the prevailing 'noise' in the markets is for a double dip.