U.S. ISM Services PMI at a Three-Month Low, Still Indicating Expansion for the 28th Straight Month
Summary
- ISM Services PMI down slightly to 54.5 in Oct., still above the 12-month avg. of 54.3.
- Business Activity (53.8) lowest since Sept. ’25; expanding for the 28th consecutive mth.
- New Orders (55.9) lowest since June; growing for 17 mths. running.
- Employment (51.4) highest since February; second successive mth. above 50.
- Prices Index (73.0) down modestly but above 70 for the seventh time in eight mths., indicating prices rising since June ’17.
The U.S. ISM Services PMI declined to a lower-than-expected 54.5 in October from 54.9 in September and 55.4 in August, data from the Institute for Supply Management showed, indicating expansion in the services sector for the 28th straight month but at the slowest pace since July. The Action Economics Forecast Survey had expected 54.7 for October. The latest reading was above 52.0 in October 2025 and a low of 49.4 in June 2024, while remaining below its recent high of 56.1 in February and a record-high 67.5 in November 2021. The 12-month average was 54.3, pointing to continued growth in the U.S. services sector.
Haver Analytics constructs a composite index combining the services index and the manufacturing reading. This index slipped to 54.6 in October from 54.9 in September and 55.3 in August, signaling expansion for the 17th consecutive month but at the weakest pace since July. The latest result was above 51.6 in October 2025 and a low of 49.3 in June 2024, albeit remaining below a high of 55.7 in February and a record-high 66.7 in November 2021. These series date back to July 1997.
In the latest services survey, the business activity index fell to 53.8 in October from 56.5 in September and 61.7 in August, indicating continued expansion in business activity for 28 months in a row but at the slowest rate since September 2025. The index was above a low of 50.0 in June 2024 but below a peak of 70.9 in November 2021. In October, 20.8% of respondents (NSA) reported higher activity while 11.4% reported an activity decline. The new orders index decreased to 55.9 in October from 59.8 in September and 60.9 in August, reflecting expansion in new orders for the 17th successive month but at the slowest pace since June. The index was above a low of 47.2 in May 2025 but below a high of 61.0 in February 2023 and a record-high 69.2 in October 2021. In October, 26.1% of respondents (NSA) reported higher new orders while 9.0% reported declines. Meanwhile, the supplier deliveries index (NSA) rose to 56.7 in October from 53.2 in September, indicating slower performance in supplier deliveries for the 23rd straight month, following one month in faster territory in November 2024.
On the labor front, the employment index advanced to 51.4 in October from 50.1 in September, showing employment activity in the services sector expanded for the second straight month after contracting in August and July. The latest reading was above a low of 43.5 in December 2023 but below a high of 54.1 in June 2023 and a peak of 58.9 in April 2021. In October, an increased 16.6% of respondents (NSA) indicated higher employment while a lessened 13.5% reported declines.
On the inflation front, the prices index, above 70 for the seventh time in eight months, edged down to a still-elevated 73.0 in October from 74.0 in September, indicating prices paid by services organizations for materials and services had risen (i.e., above 50) since June 2017. The index was well above a low of 53.9 in March 2024 but below a peak of 83.7 in March 2022. In October, 48.6% of respondents (NSA) reported higher prices while only 4.0% reported price declines.
Additionally, the new export orders index rebounded to 55.2 in October from 46.9 in September, showing new export orders expanded for the fourth time in five months. The imports index climbed to 54.2 in October from 52.9 in September, marking the eighth expansion in nine months. The inventories index slid to 55.4 in October from 57.8 in September, indicating inventories expanded for the ninth consecutive month but at the weakest pace since July, while the inventory sentiment index edged up to 52.1 from 51.7, showing continued expansion since May 2023. The backlog of orders index increased to 58.0 in October from 56.6 in September, marking the fastest pace of expansion since July 2022, following an 11-month period of contraction from March 2025 through January 2026. These series are not seasonally adjusted and not included in the ISM Services PMI total.
The ISM Services PMI is a composite index consisting of four equally weighted diffusion indexes: Business Activity, New Orders, Employment, and Supplier Deliveries. A reading above 50 indicates expansion in the services sector; below 50 suggests contraction. Supplier Deliveries is the only ISM index that is inversed; a reading above 50 indicates slower deliveries. The ISM figures are available in Haver's USECON database, with additional detail in the SURVEYS database. The expectations figure from Action Economics is in the AS1REPNA database.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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