ISM Services PMI
Actual: 54.9%
Previous: 55.4%
27th consecutive month of expansion, slight 0.5-point decline
Business Activity
Actual: 56.5%
Previous: 61.7%
Sharp 5.2-point slowdown, still in expansion
New Orders
Actual: 59.8%
Previous: 60.9%
16th consecutive month of expansion
Employment
Actual: 50.1%
Previous: 47.8%
Back in expansion for the first time in three months
Prices
Actual: 74.0%
Previous: 72.6%
Highest since July 2022 (74.5%), above 60% for 22 straight months
Backlog of Orders
Actual: 56.6%
Previous: 55.6%
Eighth consecutive month of expansion
New Export Orders
Actual: 46.9%
Previous: 56.3%
Down 9.4 points, below 50% for the first time in eight months
The real signal, prices keep climbing despite the weak NFP
The Prices Index at 74.0% is the highest since July 2022, with the 12-month average at 69%, the highest since March 2023
Seventeen out of seventeen reporting industries cite higher prices, none report a decline
Fuel is mentioned twice as often as any other factor, directly linking this release to the oil shock already documented in this series
A resilient services sector, unlike the NFP
Services PMI at 54.9%, above its 12-month average (54.1%), corresponding to 2.1% annualized GDP growth according to ISM
Thirteen industries growing versus four contracting
This contrasts with the +29K NFP: activity stays solid while job creation collapses
Employment, a rebound that tempers the NFP
The Employment Index returns to 50.1%, above its 12-month average (49%)
ISM attributes it to rising backlogs and elevated activity levels
Eight industries still report falling employment, with an explicit comment on restructuring tied to AI
Fragility signals beneath the headline
Business Activity sharply lower (-5.2 points)
Export Orders contracting, with comments on shipment delays and rising surcharges
Imports down 3.4 points to 52.9%
Construction the only industry with falling New Orders, with a strong comment: half of buyers can no longer qualify for a loan because of rates
Consistency with ISM Manufacturing
Manufacturing Prices at 77.9% and Services Prices at 74.0%, both surveys confirm the oil shock is spreading through the whole real economy
Both surveys cite Canada (tariffs, canola, cross-border trade), the emerging theme flagged in the ISM Manufacturing analysis
Implications
DXY: mixed read, solid activity and very high prices weigh against a Fed that stops for good, but together they aren't enough to revive October hike odds after the NFP and the Williams and Jefferson messages
September CPI is once again the main arbiter, both ISM surveys confirm that upstream price pressure remains strong
USD/JPY and yields: likely support for the dollar after the post-NFP pullback, the market may reassess December odds
Point of caution
ISM prices paid measure business costs, not final inflation, the pass-through to consumer prices depends on firms' ability to raise prices while wages slow (+0.1% m/m in the NFP)
The contrast between solid services and weak payrolls may reflect statistical noise or an AI effect on headcount, to be confirmed over coming months
Any shift in the US-Iran file would quickly change the read, lower oil would ease pressure on the prices index