US Services Growth Accelerates

The ISM Services PMI decreased to 54.5 in October 2026, the lowest in three months, compared to 54.9 in September and forecasts of 54.8. The reading pointed to a slowdown in services growth, due to business activity (53.8 vs 56.5), new orders (55.9 vs 59.8), and inventories (55.4 vs 57.8). Meanwhile, there was slower supplier delivery performance (56.7 vs 53.2) while employment expanded for a second month (51.4 vs 50.1) and price pressures eased (73 vs 74). “Tariffs and fuel cost impacts continued to be the most-cited issues impacting respondents’ supply chains, while many respondents indicated they are not yet seeing the full impact of these cost escalations or have not passed them through to customers. This indicates that more pricing pressure is on the way if oil and tariff cost impacts are not mitigated, even if they do not increase from current levels. Commentary on supply chain constraints increased significantly month over month", according to Steve Miller, Chair of the ISM.

The ISM Services PMI fell to 54.9 in September 2026 from 55.4 in August, compared with expectations of 55. The index nevertheless remained in expansion territory for a 27th consecutive month, indicating continued growth in the US services sector. Business activity eased more noticeably, with the Business Activity Index dropping to 56.5 from 61.7, while new orders also moderated to 59.8. Employment improved, moving back above the 50 threshold to 50.1 after two months of contraction. Supplier deliveries slowed, with the corresponding index rising to 53.2, while backlogs strengthened to 56.6, their highest level since July 2022. Price pressures remained a major concern, with the Prices Index climbing to 74, its highest since July 2022 and above 70 for the sixth time in seven months. Export orders weakened sharply, falling below 50 for the first time in eight months. Tariffs, fuel costs and supply-chain constraints remained key concerns for businesses.

The ISM Services PMI rose to 55.4 in August 2026 from 54.1 in July, beating forecasts of 54.3. The reading pointed to the strongest gain in the services sector in six months, with business activity (61.7 vs 59.1), new orders (60.9 vs 57.2), inventories (56.7 vs 51.4) all rising at a faster pace. Backlog of orders also went up (55.6 vs 50.9), with some respondents attributing it to low staffing levels at their companies. On the other hand, employment contracted for a second month (47.8 vs 47.4) and price pressures intensified to a four-year high (72.6 vs 70.3), with petroleum-related products, diesel, and gasoline reported as up in price in August. Meanwhile, the supplier deliveries index continued to indicate slower performance (51.3 vs 52.8). “Tariffs and the Middle East conflict returned as the most cited issues impacting respondents’ supply chains", according to Steve Miller, Chair of the ISM Services Business Survey Committee.