US services activity continued to expand in September 2026, but at a slower pace: the Institute for Supply Management’s Services PMI fell to 54.9 from 55.4 in August. The sharper signal was on costs: ISM’s Prices Index rose to 74.0, its highest reading since July 2022. That index reflects prices organizations reported paying for inputs; it is not a measure of consumer inflation.
What changed in the September ISM Services PMI?
The Services PMI dropped 0.5 percentage point to 54.9, according to the Institute for Supply Management’s September 2026 report. ISM generally interprets readings above 50 as indicating expansion, so 54.9 signals continued growth in services-sector activity, not contraction. The reading was slightly below the 55.2 median forecast of economists polled by Reuters, as reported by Reuters.
The headline is a composite, not a direct measurement of how much the sector produced. ISM gives equal weight to Business Activity, New Orders, Employment, and Supplier Deliveries. The table shows September and August values where they are supplied in ISM’s report.
| Index | September 2026 | August 2026 | What the reading indicates |
|---|---|---|---|
| Services PMI | 54.9 | 55.4 | Above 50 generally indicates expansion. |
| Business Activity | 56.5 | 61.7 | Activity expanded, but its index fell 5.2 points. |
| New Orders | 59.8 | 60.9 | Orders expanded, with the index down 1.1 points. |
| Employment | 50.1 | Below 50 for the prior two months | Just back above the expansion threshold. |
| Supplier Deliveries | 53.2 | 51.3 | Above 50 means slower, not faster, deliveries. |
| Prices | 74.0 | 72.6 | Organizations continued to report rising input prices; this was the highest reading since July 2022. |
| Backlog of Orders | 56.6 | not stated (ISM September 2026 report) | Highest reading since July 2022. |
| New Export Orders | 46.9 | not stated (ISM September 2026 report) | Below 50, indicating contraction in reported export orders. |
The components use diffusion indexes: they capture the balance and direction of respondents’ month-to-month reports, rather than the exact percentage change in output, jobs, or prices. The Supplier Deliveries index is the exception to the usual intuitive reading of the 50 threshold: a higher value means slower deliveries.
#1 Best Overall
Why did the Services PMI fall?
The composite eased as Business Activity and New Orders lost momentum. Business Activity fell 5.2 points to 56.5, and New Orders declined 1.1 points to 59.8. Both remained above 50, so the survey still showed expansion in these areas, just less briskly than before.
Other components pulled in different directions. Employment edged above 50 to 50.1 after two months below the threshold. Backlog rose to 56.6, its highest reading since July 2022, while New Export Orders fell to 46.9. In ISM’s October 6 roundup, Services Business Survey Committee Chair Steve Miller said that, given order backlogs and continued strength in new orders, companies had little alternative but to add workers. That is his reading of the survey pattern, not a rule that applies to every employer.
Rank #2
Why are services prices rising?
ISM’s Prices Index rose 1.4 points to 74.0, and services organizations reported paying higher prices for materials and services for the 112th consecutive month. In September, 50.3 percent of respondents reported higher prices, 47.5 percent reported no change, and 2.2 percent reported lower prices. The index measures the direction of input-price reports; it does not say that consumer prices rose 74 percent or provide an inflation rate.
ISM respondents also described longer supplier lead times and tariff-related delays. Those comments are individual survey responses, not a representative breakdown of what caused the price increase. Reuters attributed pressure in part to fuel costs and supply-chain strain, citing its sources; the ISM survey itself does not establish those causes.
Rank #3
What the report can—and cannot—tell you
ISM surveys purchasing and supply executives at organizations operating in the United States, across industries classified using NAICS. Respondents compare conditions with the previous month, and results are weighted by each industry’s contribution to GDP. The index therefore indicates the breadth and direction of reported change; it is not a direct count of jobs created, a precise output-growth rate, or a consumer-price measure.
ISM notes that 48.1 is the historical PMI threshold that, over time, generally corresponds with overall US economic expansion. That longer-run relationship is distinct from the report’s general rule that a reading above 50 indicates services-sector expansion. Miller said September’s 54.9 historically corresponded to a 2.1-percentage-point increase in real GDP on an annualized basis. This is ISM’s interpretation of a past relationship, not a GDP release, a measured September growth rate, or a forecast.
Quick Recap
Best Value
- Ideal for Gifting
- Ideal for a bookworm
- Compact for travelling
Rank #4
How to read the September result
- Growth: The services sector remained in expansion, but the headline and activity indexes weakened from August.
- Costs: Input-price reports strengthened to their highest index level since July 2022; this is not equivalent to consumer inflation.
- Hiring and orders: Employment returned just above 50 and backlogs were elevated, while export orders contracted.
- Delivery delays: Supplier Deliveries remained above 50, which means respondents experienced slower deliveries.
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
