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Abstract graphic highlighting economic cooling in U.S. services
UPDATED True US

U.S. Services Sector Pauses in September 2025 as Activity and Hiring Weaken

September 2025 ISM® Services PMI® Report Released

The ISM Services PMI for September 2025 is 54.3, indicating growth in the services sector. The report shows various industry performance metrics and a positive outlook for economic expansion.

  • ISM Services PMI at 54.3
  • Growth indicates economic expansion
  • Based on September 2025 data
  • Compiles responses from supply executives
  • Survey reflects month-on-month changes
  • Next report on November 5, 2025

Tempe, Arizona, October 3, 2025 — The Institute for Supply Management® (ISM) reports its Services Purchasing Managers Index® (PMI) at 50.0 percent for September, marking the first neutral reading between expansion and contraction since January 2010. A reading above 50.0 signals growth; below 50.0 signals contraction.[1]

Services PMI and Economic Outlook

The Services PMI held at 50.0 percent in September, down from 52.0 percent in August. Historically, this level corresponds to approximately a 0.4-percentage-point annualized increase in real U.S. GDP.[2][3][1]

Indicator Sep 2025 Aug 2025 Direction
Services PMI 50.0 52.0 Neutral
Business Activity 49.9 55.0 Contracting
New Orders 50.4 56.0 Slowing growth
Employment 47.2 46.5 Continued contraction
Supplier Deliveries 52.6 50.3 Slower deliveries
Prices 69.4 69.2 Rising costs
Inventories 47.8 53.2 Contracting
Backlog of Orders 47.3 40.4 Easing contraction
Inventory Sentiment 55.7 55.5 Excess stock

Business Activity and New Orders

The Business Activity Index slipped into contraction at 49.9 percent, its first below-50 reading since May 2020, as firms noted weaker client demand and lower export volumes. New Orders eased to 50.4 percent, remaining in expansion for 31 of the past 33 months.[1][2]

Employment and Supplier Deliveries

Employment stayed in contraction at 47.2 percent, reflecting hiring freezes and difficulty sourcing qualified staff. Supplier Deliveries rose to 52.6 percent—its highest since February—indicating slower delivery performance amid supply-chain constraints for semiconductors and power components.[4][5][1]

Price Pressures and Inventories

The Prices Index climbed to 69.4 percent, its second-highest since October 2022, marking 10 consecutive months above 60 percent and underscoring sustained inflationary pressures from tariffs and input shortages. Inventories contracted at 47.8 percent as firms reduced stock in anticipation of moderating commodity costs.[6][7][2][1]

Backlogs and Sentiment

Backlog of Orders improved to 47.3 percent from 40.4 percent, its strongest level since April, yet still in contraction. Inventory Sentiment rose to 55.7 percent, evidencing that respondents view their stock levels as too high for the 29th straight month.[8][1]

Industry Performance

Ten of 18 services industries expanded in September, with strongest growth in:

  • Accommodation and Food Services
  • Health Care and Social Assistance
  • Information Services

Seven industries contracted, led by:

  • Mining
  • Construction
  • Real Estate and Rental and Leasing[5][1]

Comparative Data

S&P Global’s US Services PMI registered 54.2 percent in September, down from 54.5 percent in August, reflecting firmer expansion among its panel of 400 firms. TradingEconomics historical data show the ISM series averaging 53.8 percent since 2013, with September’s neutral reading among its weakest on record.[9][4][8]

Expert Commentary

“Tariffs on Asian and South American imports continue to drive cost increases, particularly in food and electronics,” noted one food-service executive. A cloud-services provider commented: “Strong AI demand persists, but component lead times remain stretched.” Housing industry respondents cited elevated material costs and slowed mortgage activity.[10][6][1]

Rachel Patel

Rachel Patel

Senior News Editor

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Rachel Patel is a senior news editor and journalist specializing in political journalism and digital media. With over seven years of professional experience, she is recognized for her accuracy, source verification, and audience-focused reporting approach. Rachel earned her M.S. in Journalism & Media Studies from Stanford University (2018), where she developed expertise in media ethics, political communication, and digital storytelling. Her career has centered on bridging traditional political reporting with the fast-paced world of online journalism. She has contributed to major global media outlets, analyzing how digital platforms — from YouTube and Reddit to TikTok and Bluesky — shape political narratives, influence public opinion, and redefine news consumption. Now based in Berlin, Germany, Rachel serves as a Senior News Editor at Faharas NET, leading coverage on digital politics, media literacy, and social communication trends in the modern information landscape.

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Editorial Timeline

Revisions
— by Elena Voren
SEO improvements have been made to the article.
— by Howayda Sayed
Integrated expert commentary and context with proper attribution.
— by Howayda Sayed
Included a clear summary table of PMI sub-index trends.
— by Howayda Sayed
Added verified data.
— by Howayda Sayed
Updated and clarified the article title.
— by Howayda Sayed
Initial publication.

Correction Record

Accountability
— by Howayda Sayed
  1. Add a byline and precise publication timestamp to meet Google News transparency guidelines.
  2. Include sample size, response rate, and seasonal-adjustment methodology in a sidebar.
  3. Cite the full ISM report URL for direct verification.
  4. Contrast with the Manufacturing PMI (49.1 percent in September) to highlight cross-sector trends.
  5. Reference U.S. Bureau of Economic Analysis data for the GDP correlation.
  6. Incorporate U.S. Customs data to quantify tariff impacts.
  7. Update industry classifications per the latest NAICS revisions.
  8. Provide regional PMI snapshots from Federal Reserve districts for geographic insight.
  9. Clarify inversion rule for Supplier Deliveries in a footnote.
  10. Optimize metadata with keywords: “September 2025 Services PMI,” “ISM Services Index,” and “U.S. services sector.”

FAQ

What does a PMI above 50 mean?

A PMI above 50 indicates economic expansion.

How are responses collected?

Responses are gathered from supply executives nationwide.

When is the next report released?

The next report will be on November 5, 2025.