U.S. ISM Services Index (September 2026)

ISM Services index eases in September, while price pressures continue to intensify 

• The ISM Services PMI fell 0.5 points to 54.9 in September. Despite the pullback, the index has remained in expansionary (+50-point) territory for 27 months in a row. The result was broadly in line with the market consensus forecast. 
• Looking through the components, the largest drop was in business activity, which fell 5.2 points to 56.5. New orders also pulled back, falling 1.1 points to a still-solid 59.8. This came alongside a more pronounced decline in new export orders, falling from 56.3 to 46.9. 
• The employment index improved by 2.3 points to 50.1, nudging back into expansionary territory, after holding below this threshold in five of the last six months. 
• Price pressures intensified further, with the prices paid index rising 1.4 points to 74.0 – the highest level since mid-2022. Meanwhile, supplier deliveries rose 1.9 points to 53.2, indicating somewhat slower delivery times after several months of improving supply conditions.
• Industry comments generally aligned with the survey's inflation signal. These included reports that "shipping containers from overseas are double the cost, causing price increases" in Retail Trade, while respondents in Other Services noted that "the cost of fuel continues to impact our cost of providing services."  

Key Implications

• Following August's strong showing, the ISM services index pulled back modestly in September, reflecting softer readings for business activity and new orders. While the moderation points to some cooling in services-sector momentum toward the end of the third quarter, the index remains firmly in expansion territory and continues to signal healthy growth in the largest segment of the U.S. economy. 
• The one major fly in the ointment was the surge in price pressures, with the corresponding ISM services price index now back near mid-2022 levels. Supplier delivery times also lengthened in September, while industry commentary pointed to ongoing cost pressures. Together, the details suggest that inflationary pressures within the services sector remain elevated, reinforcing expectations that the Fed will deliver an additional rate hike before year-end.  
    

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