Business Activity Index at 59.1 percent; New Orders Index at 57.2 percent; Employment Index at 47.4 percent; Supplier Deliveries Index at 52.8 percent

/PRNewswire/ - The services sector economy kept expanding during July, according to the nation's purchasing and supply executives in the latest ISM Services PMI Report. The Services PMI registered 54.1 percent, marking the 25th straight month above the growth threshold.

The report came from Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management Services Business Survey Committee: "The Services PMI came in at 54.1 percent in July, up 0.1 percentage point from the 54 percent posted in June. The Business Activity Index stayed in expansion territory, rising 3.7 percentage points to 59.1 percent from June's 55.4 percent. The New Orders Index reached 57.2 percent, gaining 2.1 percentage points over June's 55.1 percent. The Employment Index fell back into contraction at 47.4 percent after one month of growth, dropping 3.8 percentage points from the 51.2 percent seen in June."

"The Supplier Deliveries Index stood at 52.8 percent, down 1.6 percentage points from June's 54.4 percent. This marks the 20th consecutive month above 50 percent, pointing to slower supplier performance. Note that Supplier Deliveries is the sole ISM PMI index that runs in reverse; readings over 50 percent signal slower deliveries, which is normal as demand rises with economic improvement."

"The Prices Index stayed above 70 percent for the fourth time in five months, reaching 70.3 percent in July, up 2.6 percentage points from June's 67.7 percent. The index has topped 60 percent for 20 straight months and lifted its 12-month average by 0.1 percentage point to 68.1 percent, the highest level since April 2023."

"The Inventories Index hit 51.4 percent, edging up 0.2 percentage point from June's 51.2 percent. The Inventory Sentiment Index expanded for the 39th month in a row at 52.5 percent, slipping 0.1 percentage point from June's 52.6 percent. The Backlog of Orders Index remained in expansion for a sixth straight month, falling 4 percentage points to 50.9 percent from June's 54.9 percent. New Export Orders stayed at or above 50 percent for the sixth consecutive month at 52 percent, rising 1.6 percentage points from June's 50.4 percent. The Imports Index moved back into expansion at 51.8 percent, climbing 2.4 percentage points from June's 49.4 percent and ending a three-month decline that began in March."

"Thirteen industries posted growth in July, one fewer than in June, while four reported contraction, matching the prior month. The July Services PMI of 54.1 percent sits 0.7 percentage point above the 12-month average of 53.4 percent. That average has risen for seven straight months, adding 0.3 percentage point from June's 53.1 percent."

Miller added, "The Prices Index crossed the 70-percent mark for the fourth time in five months at 70.3 percent. Yet the count of commodities listed as down in price rose to six from three last month. Petroleum-related items and plastics again appeared among those rising in price. Transformers dropped off the short-supply list but joined the up-in-price group. The Supplier Deliveries Index continued to show slower performance; its 52.8 percent reading eased for a third straight month and now sits 0.8 percentage point below its 12-month average of 53.6 percent."

"The Employment Index at 47.4 percent fell 1.3 percentage points below its 12-month average of 48.7 percent and reached its lowest point since March. This index has stayed below 50 percent for 12 of the past 18 months. Even so, the Business Activity Index posted its second-highest mark since the 60.5 percent seen in May 2024, while the New Orders Index achieved its fifth-highest reading in that span."

"Supplier Deliveries continued to ease, and eight commodities appeared on the short-supply list, down from nine in June. Technical labor and memory components still face supply issues, with some respondents extending order windows to handle longer lead times. Copper and aluminum shifted from the up-in-price list to the down-in-price list."

"Respondents mentioned tariff effects and Middle East tensions less often than before. The World Cup again surfaced in comments tied to higher activity and orders. The U.S. services economy remains steady overall. Worries persist around mortgage rates, inflation, and ongoing price pressures from the recent climb in petroleum costs."

INDUSTRY PERFORMANCE
The 13 services industries reporting growth in July, listed in order, are: Retail Trade; Transportation and Warehousing; Wholesale Trade; Management of Companies and Support Services; Information; Construction; Accommodation and Food Services; Public Administration; Utilities; Educational Services; Mining; Professional, Scientific and Technical Services; and Finance and Insurance. The four industries reporting contraction in July are: Agriculture, Forestry, Fishing and Hunting; Other Services; Health Care and Social Assistance; and Real Estate, Rental and Leasing.

WHAT RESPONDENTS ARE SAYING

"Overall volume of business is slightly down for the year." [Agriculture, Forestry, Fishing and Hunting]
"Sales continue to slide despite increased discounts. Mounting cost pressures from all fronts." [Construction]
"Economic conditions remain stable. Banking activity continues to be supported by healthy commercial client demand, though businesses remain cautious amid interest rate and inflation uncertainty. Overall outlook remains positive for both the banking industry and my company." [Finance and Insurance]
"In the tertiary care segment of hospital operations, patient volumes, revenue and activity across the board are up, and given the economic climate, this was an unexpected result. Supply chains are operating as expected: There are few, if any, impactful back orders, deliveries are consistent and fill rates are up. Employment is still in high demand, yet our institution appears to be faring well as full-time employee positions are filling without excessive recruitment. Forecast remains above average." [Health Care and Social Assistance]
"Business is starting to pick up especially with smaller firms. Just hope it keeps improving." [Management of Companies and Support Services]
"Uncertainty on how the Iran conflict will impact the price of oil, as well as the knock-on effect to construction and other materials. The city has several capital projects pending and ongoing, which will be impacted." [Public Administration]
"Network gear supply (internet access points and switches) for store equipment set up on four- to six-month lead times; needing to place large order in anticipation of new store openings in order to have sufficient network gear to run the store." [Retail Trade]
"Conditions are largely unchanged from last month. The exception is pricing, which continues to rise, driven mainly by fuel and labor costs. Demand remains stable." [Transportation and Warehousing]
"Electric utility materials continue to be in high demand, causing competition among utilities for production slots. Furthermore, more suppliers are requiring progress payments or a down payment on goods as part of PO agreements." [Utilities]
"Business is more robust than expected, considering some of the economic headwinds still plaguing the industry. Lumber supply is tighter, and freight rates and availability are challenges. Many of our builders are pushing back hard on price increases. However, the outlook is favorable for the remainder of 2026." [Wholesale Trade]

ISM SERVICES SURVEY RESULTS AT A GLANCE COMPARISON OF ISM SERVICES AND ISM MANUFACTURING SURVEYS JULY 2026
Index	Services PMI	Manufacturing PMI
Series Index Jul	Series Index Jun	Percent Point Change	Direction	Rate of Change	Trend* (Months)	Series Index Jul	Series Index Jun	Percent Point Change
Services PMI	54.1	54.0	+0.1	Growing	Faster	25	55.6	53.3	+2.3
Business Activity/Production	59.1	55.4	+3.7	Growing	Faster	25	58.5	52.2	+6.3
New Orders	57.2	55.1	+2.1	Growing	Faster	14	56.7	56.0	+0.7
Employment	47.4	51.2	-3.8	Contracting	From Growing	1	52.8	49.7	+3.1
Supplier Deliveries	52.8	54.4	-1.6	Slowing	Slower	20	58.9	57.4	+1.5
Inventories	51.4	51.2	+0.2	Growing	Faster	6	51.2	51.4	-0.2
Prices	70.3	67.7	+2.6	Increasing	Faster	110	71.1	73.0	-1.9
Backlog of Orders	50.9	54.9	-4.0	Growing	Slower	6	55.0	50.5	+4.5
New Export Orders	52.0	50.4	+1.6	Growing	Faster	2	53.0	48.5	+4.5
Imports	51.8	49.4	+2.4	Growing	From Contracting	1	55.7	52.9	+2.8
Inventory Sentiment	52.5	52.6	-0.1	Too High	Slower	39	N/A	N/A	N/A
Customers' Inventories	N/A	N/A	N/A	N/A	N/A	N/A	40.7	42.3	-1.6
OVERALL ECONOMY	Growing	Faster	74
Services Sector	Growing	Faster	25

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* (5); Aluminum Products (2); Beef (2); Computers and Related Items (3); Copper (8); Diesel* (5); Fiberglass Insulation; Fuel* (6); Gasoline* (6); Heating, Ventilation and Air Conditioning (HVAC) Equipment (3); Labor - Technical (2); Lumber (2); Memory Products (7); Paper Products; Petroleum Based Products (3); Plastics (2); Software - Licensing (6); Software - Maintenance/Support (4); Steel; Steel Products (4); Switchgear; Transformers; and Transportation (5).

Commodities Down in Price
Aluminum*; Chicken Wings; Copper; Diesel* (2); Fuel* (2); and Gasoline* (2).

Commodities in Short Supply
Aluminum Products; Electronic Components (6); Labor (2); Labor - Technical; Memory Components (7); Steel Products (2); Switchgear (2); and Wire and Cable (2).

Note: The number of consecutive months the commodity is listed is indicated after each item.
*Indicates both up and down in price.

JULY 2026 SERVICES INDEX SUMMARIES

Services PMI
In July, the Services PMI registered 54.1 percent, 0.7 percentage point above its 12-month moving average of 53.4 percent. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates it is generally contracting.