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

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

TEMPE, Ariz., Oct. 3, 2025 — Economic activity in the services sector was unchanged in September, according to the nation’s purchasing and supply executives in the latest ISM® Services PMI® Report. The Services PMI® reading was 50.0 percent, the breakeven point between expansion and contraction.

Key indexes for September include: Business Activity/Production 49.9%; New Orders 50.4%; Employment 47.2%; Supplier Deliveries 52.6%; Inventories 47.8%; Prices 69.4%; Backlog of Orders 47.3%; New Export Orders 46.5%; Imports 49.2%; Inventory Sentiment 55.7%.

Summary and Committee Remarks

Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee, said: “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 percentage points 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.”

He added: “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. The Prices Index registered 69.4 percent in September, a 0.2-percentage point increase from August’s reading of 69.2 percent. 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).”

Miller concluded: “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 (in order) were: 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 contraction in September (in order) were: 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.” [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. We are still facing significant supply chain challenges, especially for advanced semiconductors and power components, with lead times remaining extended.” [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.” [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. 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]

Results at a Glance

Commodities

Up in price: Aluminum Chlorohydrate; Aluminum Products; Beef; Computers and Peripherals; Copper Products; Electrical Components; Labor; Software Maintenance; Steel Products; Valves.

Down in price: Diesel Fuel; Gasoline; Lumber; Oriented Strand Board (OSB) Panels.

In short supply: Construction labor.

About This Report

The ISM® Services PMI® Report is based on data compiled from purchasing and supply executives nationwide in the services sector. The Services PMI® is a composite index based on diffusion indexes for Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. A reading above 50 percent indicates the services economy is generally expanding; below 50 percent indicates it is generally contracting. Data in this release reflect activity for September 2025.

Contact

Kristina Cahill
PMI® Reports Analyst / ISM, PMI®/Research Manager
Tempe, Arizona
+1 480.455.5910
Email: [email protected]

Source: Institute for Supply Management