The ISM services index came in a touch softer than expected, but remains at healthy levels, indicating the US, for now, is in a relatively good position to withstand the economic headwinds coming from the Middle East conflict. The headline index dropped from 56.1 to 54 (consensus 54.9). The chart below shows the relationship between the ISM manufacturing and services ISM business activity readings and year-on-year GDP growth. They are currently consistent with the US economy expanding 2.5% this year, which is broadly in line with our GDP growth forecast for 2026. In terms of the details, on the positive side, the new ... (full story)