Services PMI® at 50%; September 2025 ISM® Services PMI® Report

Business Activity Index at 49.9%; New Orders Index at 50.4%;Employment Index at 47.2%; Supplier Deliveries Index at 52.6%

TEMPE, Ariz., Oct. 3, 2025 /PRNewswire/ -- Economic activity in the services sector was unchanged in September, say the nation's purchasing and supply executives in the latest ISM^® Services PMI^® Report. The Services PMI^® reading of 50 percent was at the breakeven point between expansion and contraction for the first time since January 2010.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management^® (ISM^®) Services Business Survey Committee: "In September, the Services PMI^® registered an unchanged reading of 50 percent, 2 percentage points lower than the August figure of 52 percent. The Business Activity Index moved into contraction territory in September, registering 49.9 percent, 5.1 percentage points lower than the reading of 55 percent recorded in August. This is the first time the index has entered contraction territory since May 2020. The New Orders Index remained in expansion in September, with a reading of 50.4 percent, down 5.6 percent from August's figure of 56 percent. The Employment Index remained in contraction territory for the fourth month in a row and the fifth time in the last six months; the reading of 47.2 percent is 0.7 percentage point higher than the 46.5 percent recorded in August.

"The Supplier Deliveries Index registered 52.6 percent, 2.3 percentage points higher than the 50.3 percent recorded in August and its highest reading since February (53.4 percent). This is the 10th consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance. (Supplier Deliveries is the only ISM^® PMI^® Reports index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

"The Prices Index registered 69.4 percent in September, a 0.2-percentage point increase from August's reading of 69.2 percent. The index has exceeded 60 percent for 10 straight months, its longest such streak since 30 consecutive readings above 60 percent from October 2020 to March 2023.

"The Inventories Index dropped into contraction in September after three months in expansion territory, registering 47.8 percent, a decrease of 5.4 percentage points from August's figure of 53.2 percent. The Inventory Sentiment Index expanded for the 29th consecutive month, registering 55.7 percent, up 0.2 percentage point from August's figure of 55.5 percent. The Backlog of Orders Index was in contraction territory for the seventh month in a row, registering 47.3 percent in September, but with a 6.9-percentage point jump from the August figure of 40.4 percent to hit its highest reading since April (48 percent).

"Ten industries reported growth in September, two fewer than in August, while the number reporting contraction increased from four to seven. The September reading of 50 percent is 2 percentage points below the 12-month average of 52 percent. The 12-month average figure is the lowest since September 2024 (51.8 percent)."

Miller continues, "September's Services PMI^® level returned to numbers very similar to May and July, with weakness in business activity and continued weakness in employment. The recovery in the Backlog of Orders Index to a reading indicating slower contraction was a positive signal, as was continued expansion in the New Orders index. Commentary in general indicated moderate or weak growth, with more isolated observations of supplier delivery challenges. Employment continues to be in contraction territory, thanks to a combination of delayed hiring efforts and difficulty finding qualified staff."

INDUSTRY PERFORMANCE
The 10 services industries reporting growth in September — listed in order — are: Accommodation & Food Services; Health Care & Social Assistance; Other Services; Information; Public Administration; Educational Services; Wholesale Trade; Finance & Insurance; Transportation & Warehousing; and Utilities. The seven industries reporting a contraction in the month of September — listed in order — are: Mining; Agriculture, Forestry, Fishing & Hunting; Construction; Management of Companies & Support Services; Professional, Scientific & Technical Services; Retail Trade; and Real Estate, Rental & Leasing.

WHAT RESPONDENTS ARE SAYING

• "We are beginning to see the impact of the tariffs impact our business, particularly for food products from India, China, and Southeast Asia, coffee from South America, and apparel and electronics from Asia. Our year-over-year cost increases are getting progressively greater." [Accommodation & Food Services]
• "New residential construction continues to struggle in a tough market. Housing values remain high, and tariffs are beginning to be passed through on materials that are metal based. The pace of housing starts has been stagnant to slightly declining, as we head out of the summer building season." [Construction]
• "Pharmacy costs continue to rise, and medical devices are being held at bay mainly due to contracts and continued negotiations where we have two to three sources for a given product." [Health Care & Social Assistance]
• "Demand for artificial intelligence (AI) and cloud infrastructure remains very strong. Our primary focus this month was on increasing production throughput to begin clearing the significant order backlog built up over the summer. While new order intake has stabilized at a high level, the overall business outlook remains positive. We are still facing significant supply chain challenges, especially for advanced semiconductors and power components, with lead times remaining extended. Price pressures are still present but have not worsened compared to the previous month." [Information]
• "Client demand in professional services remains steady, though decision-making timelines are lengthening due to continued economic uncertainty and interest-rate concerns. We are also seeing modest upward pressure on labor costs, which impacts both our internal resourcing and supplier pricing." [Professional, Scientific & Technical Services]
• "Growing apprehension regarding state efforts to reduce or eliminate property taxes that are a major revenue source for local governments. And continuing concern about future economic conditions, inflation, tariffs and their impact on increased prices." [Public Administration]
• "The overall housing market remains stagnant, which has forced our company to be hyper-vigilant about costs. However, we are growing and increasing our market share despite the headwinds. Tariffs continue to inject an unnecessary level of uncertainty across the broader economy, and costs are now beginning to increase with the full effect of the tariffs now coming into play." [Real Estate, Rental & Leasing]
• "Costs overall have stabilized, and we've not seen any interruptions in sourcing or shipments." [Retail Trade]
• "We've had more tariff charges last month than in previous months." [Utilities]
• "Business conditions continue to soften, even in markets that have historically been more resilient. Demand is simply weak." [Wholesale Trade]

ISM^® Services PMI^® Report data is seasonally adjusted for the Business Activity, New Orders, Employment and Prices indexes. ISM^® Manufacturing PMI^® Report data is seasonally adjusted for New Orders, Production, Employment and Inventories indexes.
*Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE, AND IN SHORT SUPPLY

Commodities Up in Price
Aluminum Chlorohydrate; Aluminum Products (4); Beef; Computers and Peripherals; Copper Products (2); Electrical Components (2); Labor (2); Software Maintenance (3); Steel Products (9); and Valves.

Commodities Down in Price
Diesel Fuel (7); Gasoline (7); Lumber; and Oriented Strand Board (OSB) Panels.

Commodities in Short Supply
Labor — Construction (2).

Note: The number of consecutive months the commodity is listed is indicated after each item.

SEPTEMBER  2025 SERVICES INDEX SUMMARIES

Services PMI ^®
In September, the Services PMI^® registered 50 percent, a 2-percentage point decrease compared to the August reading of 52 percent. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates it is generally contracting.

A Services PMI^® above 48.6 percent, over time, generally indicates an expansion of the overall economy. Therefore, the September Services PMI^® indicates the overall economy is expanding for the 64th straight month. Miller says, "The past relationship between the Services PMI^® and the overall economy indicates that the Services PMI^® for September (50 percent) corresponds to a 0.4-percentage point increase in real gross domestic product (GDP) on an annualized basis."

SERVICES PMI ^®  HISTORY

Business Activity
ISM^®'s Business Activity Index moved into contraction (though slight) in September for the first time in more than five years; the reading of 49.9 percent is 5.1 percentage points lower than the 55 percent recorded in August. The index contracted for the first time since May 2020. Comments from respondents include: "Slight increases in sales of everyday products" and "Lower export demands."

The eight industries reporting an increase in business activity for the month of September — listed in order — are: Other Services; Accommodation & Food Services; Information; Public Administration; Educational Services; Health Care & Social Assistance; Finance & Insurance; and Wholesale Trade. The five industries reporting a decrease in business activity for the month of September are: Mining; Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Construction; and Utilities.

New Orders

ISM^®'s New Orders Index registered 50.4 percent in September, 5.6 percentage points lower than the reading of 56 percent reported in August. The index has been in expansion territory in 31 of the last 33 months. Comments from respondents include: "Utility outage maintenance seasons is in full force: Power plant maintenance outages started this month and distribution maintenance for gas and electric continues" and "Buyers are sitting on the sidelines waiting for mortgage rates to drop; some buyers are having difficulty selling their home and are not able to purchase a new one unless they do."

The nine industries reporting an increase in new orders for the month of September — listed in order — are: Accommodation & Food Services; Other Services; Health Care & Social Assistance; Public Administration; Information; Wholesale Trade; Educational Services; Finance & Insurance; and Utilities. The six industries reporting a decrease in new orders for the month of September — listed in order — are: Real Estate, Rental & Leasing; Construction; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Management of Companies & Support Services; and Professional, Scientific & Technical Services.

Employment
Employment activity in the services sector contracted in September for the fourth month in a row. The Employment Index registered 47.2 percent, up 0.7 percentage point from the August figure of 46.5 percent and equal to the June reading. Comments from respondents include: "We have lost employees due to normal attrition and are pausing backfilling these positions at this time" and "Artificial intelligence (AI) is (positively) impacting resource productivity."

The six industries reporting an increase in employment in September — listed in order — are: Accommodation & Food Services; Real Estate, Rental & Leasing; Utilities; Retail Trade; Information; and Health Care & Social Assistance. The eight industries reporting a decrease in employment in September — listed in order — are: Management of Companies & Support Services; Public Administration; Other Services; Finance & Insurance; Professional, Scientific & Technical Services; Educational Services; Wholesale Trade; and Transportation & Warehousing.

Supplier Deliveries
In September, the Supplier Deliveries Index indicated slower supplier performance for the 10th month in a row. The index registered 52.6 percent, up 2.3 percentage points from the 50.3 percent recorded in August. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: "Longer lead times for equipment" and "Suppliers having a harder time getting components needed to make finished end products to us in a timely manner."

The nine industries reporting slower deliveries in September — in the following order — are: Accommodation & Food Services; Management of Companies & Support Services; Transportation & Warehousing; Real Estate, Rental & Leasing; Finance & Insurance; Health Care & Social Assistance; Public Administration; Professional, Scientific & Technical Services; and Educational Services. The five industries reporting faster supplier deliveries for the month of September are: Agriculture, Forestry, Fishing & Hunting; Construction; Retail Trade; Utilities; and Wholesale Trade.

Inventories
The Inventories Index moved into contraction territory for the third time in 2025 by registering its lowest reading since January: 47.8 percent, a 5.4-percentage point decrease compared to the 53.2 percent reported in August. Of the total respondents in September, 28 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Maintaining higher inventories of items purchased pre-tariffs" and "With mostly falling or expected falling commodity prices, there is a reluctance to overstock, especially without a real fear of tariff-inflicted price increases."

The seven industries reporting an increase in inventories in September — in the following order — are: Agriculture, Forestry, Fishing & Hunting; Educational Services; Information; Management of Companies & Support Services; Wholesale Trade; Health Care & Social Assistance; and Professional, Scientific & Technical Services. The five industries reporting a decrease in inventories in September are: Mining; Retail Trade; Real Estate, Rental & Leasing; Construction; and Utilities. Six industries reported no change in inventories for the month of September.

Prices
Prices paid by services organizations for materials and services increased in September for the 100th consecutive month. The Prices Index registered 69.4 percent, 0.2 percentage point higher than the 69.2 percent recorded in August. The September reading is the index's second-highest since October 2022 (70.7 percent) and its 10th straight month above 60 percent but the 35th in a row below 70 percent.

Fifteen of the 18 services industries reported an increase in prices paid during the month of September, in the following order: Accommodation & Food Services; Management of Companies & Support Services; Public Administration; Information; Construction; Other Services; Health Care & Social Assistance; Professional, Scientific & Technical Services; Transportation & Warehousing; Real Estate, Rental & Leasing; Educational Services; Finance & Insurance; Agriculture, Forestry, Fishing & Hunting; Utilities; and Wholesale Trade. No industry reported a decrease in prices paid in September.

NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report.

Backlog of Orders
The ISM^® Services Backlog of Orders Index was in contraction territory for the seventh consecutive month, and the reading of 47.3 percent was a 6.9-percentage point increase compared to the 40.4 percent reported in August and the highest since April (48 percent). Of the total respondents in September, 30 percent indicated they do not measure backlog of orders. Respondent comments include: "Continued shortage of clinical labor (physicians, nurses, lab techs and the like) and now administrative reductions" and "Major capital projects with the exception of data centers are being delayed."

The five industries reporting an increase in order backlogs in September are: Retail Trade; Other Services; Transportation & Warehousing; Educational Services; and Public Administration. The eight industries reporting a decrease in order backlogs in September — in the following order — are: Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Construction; Information; Management of Companies & Support Services; Professional, Scientific & Technical Services; Utilities; and Health Care & Social Assistance.

New Export Orders
Orders and requests for services and other non-manufacturing activities to be provided outside of the U.S. by domestically based companies contracted in September for the third straight month and sixth time in the last seven months. The New Export Orders Index registered 46.5 percent, down 0.8 percentage point compared to the August reading of 47.3 percent. Of the total respondents in September, 40 percent indicated they do not perform, or do not separately measure, orders for work outside of the U.S. Respondent comments include: "September activity was below that of August, mostly due to tariffs and the Middle East crisis, but the rate of slowing is declining" and "International demand from Europe, the Middle East and Africa and Asia-Pacific, particularly for artificial intelligence (AI) infrastructure, held steady at the high levels seen in August."

The four industries reporting an increase in new export orders in September are: Management of Companies & Support Services; Transportation & Warehousing; Information; and Wholesale Trade. The eight industries reporting a decrease in new export orders in September — in the following order — are: Real Estate, Rental & Leasing; Accommodation & Food Services; Construction; Professional, Scientific & Technical Services; Retail Trade; Educational Services; Utilities; and Finance & Insurance. Six industries reported no change in exports in September.

Imports
The Imports Index returned to contraction territory in September, registering 49.2 percent, 5.4 percentage points lower than the 54.6 percent reported in August. This month's reading is less than 1 percentage point lower than the index's average of 50.1 percent over the last 12 months. Thirty-seven percent of respondents reported that they do not use, or do not track the use of, imported materials. Respondent comments include: "We are actively trying to source more products from U.S.-Mexico-Canada Agreement suppliers to mitigate the steep tariffs on food, apparel, and electronics from Asia" and "In the process of moving a critical service from India to U.S."

The seven industries reporting an increase in imports for the month of September — in the following order — are: Educational Services; Management of Companies & Support Services; Health Care & Social Assistance; Information; Utilities; Transportation & Warehousing; and Wholesale Trade. The three industries reporting a decrease in imports in September are: Retail Trade; Finance & Insurance; and Professional, Scientific & Technical Services. Eight industries reported no change in imports in September.

Inventory Sentiment
The ISM^® Services Inventory Sentiment Index was in expansion (or "too high") territory for the 29th consecutive month in September; the reading of 55.7 percent is an increase of 0.2 percentage point from August's figure of 55.5 percent. This reading indicates that respondents feel their companies' inventory levels are too high when correlated to business requirements.

The eight industries reporting sentiment that their inventories were too high in September — listed in order — are: Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Construction; Retail Trade; Utilities; Educational Services; Information; and Health Care & Social Assistance. The three industries reporting a decrease in inventory sentiment in September are: Transportation & Warehousing; Professional, Scientific & Technical Services; and Management of Companies & Support Services. Seven industries reported no change in inventory sentiment in September.

About This Report
DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire U.S., while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of September 2025.

The data presented herein is obtained from a survey of supply executives in the services sector based on information they have collected within their respective organizations. ISM^® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation
The ISM^®Services PMI^® Report (formerly the Non-Manufacturing ISM^® Report On Business^®) is based on data compiled from purchasing and supply executives nationwide. Membership of the Services Business Survey Panel (formerly Non-Manufacturing Business Survey Committee) is diversified by the North American Industry Classification System (NAICS), based on each industry's contribution to gross domestic product (GDP). The Services Business Survey Panel responses are divided into the following NAICS code categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation & Warehousing; Information; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Public Administration; and Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services). The data are weighted based on each industry's contribution to GDP. According to U.S. Bureau of Economic Analysis (BEA) estimates (the average of the fourth quarter 2023 GDP estimate and the GDP estimates for first, second, and third quarter 2024, as released on December 19, 2024), the six largest services sectors are: Real Estate, Rental & Leasing; Public Administration; Professional, Scientific, & Technical Services; Health Care & Social Assistance; Information; and Finance & Insurance.

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment and Supplier Deliveries), this report shows the percentage reporting each response and the diffusion index. Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The remaining indexes have not indicated significant seasonality.

The Services PMI^® is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50 percent indicates that the services economy is generally expanding; below 50 percent indicates that it is generally declining. Supplier Deliveries is an exception. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.

A Services PMI^® above 48.6 percent, over time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 48.6 percent, it is generally declining. The distance from 50 percent or 48.6 percent is indicative of the strength of the expansion or decline.

The ISM^®Services PMI^® Reportsurvey is sent out to Services Business Survey Panel respondents in the first part of each month. Respondents are asked to ONLY report on U.S. operations for the current month. ISM^® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses to give the most accurate picture of current business activity. ISM^® then compiles the report for release on the third business day of the following month.

The industries reporting growth, as indicated in the ISM^®Services PMI^® Report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

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About Institute for Supply Management ^®
Institute for Supply Management^® (ISM^®) is the first and leading not-for-profit professional supply management organization worldwide. Its community of more than 50,000 in more than 100 countries around the world manage about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 by practitioners, ISM is committed to advancing the strategy and practice of integrated, end-to-end supply chain management through leading edge data-driven resources, community, and education to empower individuals, create organizational value and to drive competitive advantage. ISM's vision is to foster a prosperous, sustainable world. ISM empowers and leads the profession through the ISM^® PMI^® Reports (formerly Report On Business^®), its highly-regarded certification and training programs, corporate services, events and assessments. The ISM^® PMI^® Reports — Manufacturing and Services — are two of the most reliable economic indicators available, providing guidance to supply management professionals, economists, analysts, and government and business leaders. For more information, please visit: www.ismworld.org. 

The full text version of the ISM^® Services PMI^® Report is posted on ISM^®'s website at www.ismrob.org on the third business day* of every month after 10:00 a.m. ET. The one exception is in January, the report is released on the fourth business day of the month.

The next ISM^® Services PMI^® Report featuring October 2025 data will be released at 10:00 a.m. ET on Wednesday, November 5, 2025.

*Unless the New York Stock Exchange is closed.

SOURCE Institute for Supply Management