U.S. services activity continued to expand in September, although the pace of growth moderated as businesses reported stronger input-price pressures. The Institute for Supply Management’s services survey showed continued expansion alongside a rise in its prices index, providing another measure of business costs and the broader inflation environment.
Key Takeaways
- The ISM Services PMI fell to 54.9 in September from 55.4 in August
- The Services Prices Index rose to 74.0 from 72.6, its highest level since July 2022
- The Business Activity Index declined to 56.5 from 61.7
- The Services Employment Index returned to expansion territory at 50.1 after two months below 50
- Supplier deliveries remained slower for a 22nd consecutive month
U.S. Services Growth Remains in Expansion Territory
The ISM Services PMI fell to 54.9 in September from 55.4 in August but remained above 50, the threshold associated with expansion. The result indicated that service-sector activity continued to grow at a slightly slower pace.
The Institute for Supply Management survey tracks several areas of the U.S. services economy, including business activity, new orders, employment, prices, and supplier deliveries.
The Business Activity Index recorded a larger monthly decline, falling to 56.5 from 61.7. Despite the decrease, the measure remained in expansion territory.
New orders also continued to grow. The New Orders Index reached 59.8 in September, down from 60.9 in August but still comfortably above 50.
The September report therefore showed continued services-sector expansion alongside slower growth in activity and new orders.
Business Activity and New Orders Moderate in September
The decline in the Business Activity Index was one of the clearest changes in the September survey. The measure dropped 5.2 points from August, moving from 61.7 to 56.5.
The September figures followed earlier signs of stronger private-sector business activity, when services growth contributed to an increase in the U.S. S&P Composite PMI during July.
New orders also moderated in September. The New Orders Index declined 1.1 points to 59.8 while remaining firmly above the expansion threshold.
Supplier deliveries provided another indication of operating conditions. The supplier deliveries index showed slower deliveries for a 22nd consecutive month. Extended delivery times can affect procurement schedules and the availability of business inputs.
Together, the measures showed slower activity and order growth while services businesses continued to report overall expansion.
Input-Price Pressures Increase Across the Services Sector
The Services Prices Index rose to 74.0 in September from 72.6 in August, reaching its highest level since July 2022.
The index measures changes in prices paid by services businesses for operating inputs. A higher reading indicates that a larger share of respondents reported price increases rather than decreases.
The rise occurred even as the headline Services PMI and Business Activity Index moved lower. The contrasting trends show that input-price pressures strengthened while the pace of activity moderated.
Other inflation indicators have also provided information on business costs. August producer-price inflation data showed final-demand prices increasing 0.4% for the month and 5.4% from a year earlier.
Services Prices Reach a Multi-Year High
The September Services Prices Index reached its highest level since July 2022, rising from 72.6 to 74.0.
The measure reflects input prices reported by services businesses rather than consumer inflation directly. It therefore provides a sector-specific view of the costs companies face in their operations.
The higher reading occurred alongside weaker monthly growth in business activity and new orders, illustrating how activity and cost pressures can move in different directions within the same survey period.
Services Employment Returns to Expansion
The Services Employment Index returned to expansion territory in September, reaching 50.1 after two consecutive months below 50.
A reading above 50 indicates expansion in employment among services-sector respondents. At 50.1, the September figure was only slightly above that threshold.
The employment measure moved differently from business activity during the month. While the Business Activity Index declined, the Employment Index returned to expansion.
These components track separate aspects of the services economy. Business activity measures changes in reported activity, while the employment index reflects changes in staffing conditions among respondents.
The September results therefore showed modest employment expansion even as growth in broader business activity moderated.
September Data Adds Detail to the Inflation Picture
The September services survey combined continued expansion with stronger input-price pressure. The headline Services PMI remained above 50, while the Services Prices Index climbed to 74.0, its highest reading since July 2022.
Business activity and new orders both moderated. The Business Activity Index fell to 56.5 from 61.7, while the New Orders Index declined to 59.8 from 60.9.
Supplier delivery conditions remained extended, with the supplier deliveries index indicating slower deliveries for a 22nd consecutive month. Meanwhile, the Employment Index returned to expansion territory at 50.1.
The combination provides separate signals about growth, demand, labor conditions, input costs, and supply conditions within the services economy.
The Services Prices Index is particularly relevant to assessments of business cost pressures because it tracks the direction of prices paid for inputs. It does not establish how those costs will ultimately affect consumer prices.
Overall, the September survey showed a services sector that remained in expansion while experiencing slower activity growth and stronger input-price pressures.
Frequently Asked Questions
What was the U.S. Services PMI in September 2026?
The ISM Services PMI was 54.9 in September, down from 55.4 in August. A reading above 50 indicates expansion in the services sector.
Did U.S. services growth increase or decrease in September?
Services growth moderated in September, with the ISM Services PMI declining from 55.4 to 54.9 while remaining in expansion territory.
How did services-sector prices change in September?
The Services Prices Index increased to 74.0 from 72.6 in August, reaching its highest level since July 2022.
What does the ISM Services PMI measure?
The ISM Services PMI tracks conditions across the U.S. services sector through measures including business activity, new orders, employment, prices, and supplier deliveries.
What did the September services data show about employment?
The Services Employment Index reached 50.1 after remaining below 50 for two consecutive months, indicating a return to modest expansion.
