5 Nov 2025
The ISM Services PMI data shows improvement compared to the previous month, with business activities and new orders significantly increasing. Despite this growth driven by increased demand, inflationary pressures remain a significant concern, with prices paid reaching a three-year high largely influenced by US import tariffs.
The ISM Services PMI data demonstrated improvement compared to the previous month, with several components showing better performance.
Business activities increased by 4.4 points, while new orders rose by 5.8 points, indicating stronger growth.
Employment showed stability, and prices continued to exhibit stability, increasing by 0.6 points.
Imports experienced a significant decrease of 5.5 points, and the backlog of orders also fell by 6.5 points.
Inventories slightly decreased this month, contracting for the second consecutive month after three months of growth.
The supplier deliveries index was slightly lower than the previous month, marking its eleventh consecutive month in this state, but it remained above 50, indicating continued controlled supplier deliveries (this index is interpreted inversely).
The prices index reached 70, the highest level since October 2022, signaling persistent pricing pressure within the services sector, which significantly impacts inflation.
The inventory sentiment index remained in good condition for the third consecutive month.
The backlog of orders index has been in a state of contraction for the eighth consecutive month, reaching its lowest point since May 2009.
Performance varied across different services industries, contrasting with the manufacturing sector; eleven services industries reported growth, while six reported contraction (down from seven previously), whereas in manufacturing, contracting industries significantly outnumbered growing ones.
Industries reporting growth in October included Accommodation & Food Services, Retail Trade, Wholesale Trade, Real Estate, Health Care, Public Utilities, Transportation, Agriculture, Information Technology, Professional Services, and Educational Services.
Industries experiencing contraction were Arts, Entertainment & Recreation, Management of Companies, Support Services, Finance, Public Administration, and Construction.
Companies continue to monitor the effects of tariffs, with their activities remaining largely stable. Uncertainties stemming from a potential government shutdown persist, leading to the suspension of non-essential activities and delays in many projects. A potential decrease in operational performance is anticipated for fiscal year 2026 in some sectors, though customer demand and economic activity remain strong for some businesses, indicating overall stability with a cautious outlook.
The services sector's activity increased at its fastest rate in the past eight months, primarily driven by new orders and heightened demand. This growth, however, was accompanied by a noticeable increase in inflationary pressures, as evidenced by the prices paid index reaching a three-year high, indicating the services sector is more impacted by increased US import tariffs than other sectors.
The services sector's activity increased at its fastest rate in the past eight months, driven by new orders and increased demand, though this growth was accompanied by a noticeable rise in inflationary pressures, with the prices paid index reaching its highest in three years.
| Metric | Value | Insight |
|---|---|---|
| Overall Data Release | Improved | Better performance compared to the previous month for the services sector. |
| Business Activities | +4.4 points | Significant improvement in commercial operations. |
| New Orders | +5.8 points | Strong increase in demand for services. |
| Employment | Stable | No significant changes in hiring or workforce levels. |
| Prices Index | 70 | Highest level since October 2022, signaling persistent inflationary pressures in services. |
| Imports | -5.5 points | Substantial decrease in imported goods or services. |
| Backlog of Orders Index | Lowest since May 2009 | Contracted for the eighth consecutive month, reflecting reduced outstanding work. |
| Supplier Deliveries Index | Below prior month, above 50 | 11th consecutive month of slower deliveries, but still indicating controlled supply (inverse interpretation). |
| Inventories | Slightly decreased | Contracted for the second consecutive month after prior growth. |
| Industry Growth | 11 sectors growing | More services industries reported growth than contraction (6 sectors contracted). |
| Overall Services Activity Growth | Fastest in 8 months | Driven by new orders and increased demand, but accompanied by inflation. |
| Impact of Tariffs | Significant | Services sector disproportionately affected by US import tariffs, contributing to price pressures. |
