US services activity accelerates as new orders jump, but the employment index stays below 50

Activity in the US services sector grew faster in August 2026. The Institute for Supply Management's Services PMI rose 1.3 points to 55.4, according to the report published on 3 September. A reading above 50 means more purchasing managers reported growth than contraction.

The details

• Business activity: 61.7, up 2.6 points
• New orders: 60.9, up 3.7
• Employment: 47.8, up 0.4 but still below 50
• Supplier deliveries: 51.3, down 1.5
• Prices: 72.6, up 2.3
• Inventories: 56.7, up 5.3

Twelve services industries reported growth, one fewer than in July. Steve Miller chairs ISM's Services Business Survey Committee.

Strong demand, weak hiring, higher prices

The report pulls in two directions. Demand is clearly strong, with new orders above 60. But the employment index was below 50 in both July and August, and the prices index, at 72.6, was even higher than the 71.1 recorded in the manufacturing survey. One respondent in accommodation and food services described business conditions as positive, with the challenge being to manage the effects of tariffs and the Middle East conflict.

What it means for the Fed and the dollar

Services make up most of the US economy, and services prices are a large part of the inflation the Federal Reserve is trying to bring down. With consumer prices up 3.4% in the year to August (CPI report), a rising prices index adds to that pressure. Weak hiring points the other way: the August payrolls report showed 162,000 jobs added, after large downward revisions to June and July (jobs report).

The Fed announces its decision on 16 September (what currency traders are watching). For how purchasing managers' surveys work, see PMIs explained.