Services Sector Continues to Grow Despite Persistent Price Pressures, ISM, S&P Surveys Show

01:55 PM EDT, 10/05/2026 (MT Newswires) -- Growth in the US services sector decelerated sequentially in September, Institute for Supply Management data showed Monday, while an S&P Global (SPGI) report pointed to the fastest expansion in more than five years, with both surveys indicating inflationary pressures. The ISM's purchasing managers' index fell to 54.9 last month from 55.4 in August. The consensus was for a 55 reading in a survey compiled by Bloomberg. A reading above 50 indicates the services sector economy is generally expanding. The new orders index decreased to 59.8 from 60.9 sequentially in September, while the business activity gauge dropped to 56.5 from 61.7. The prices index grew 1.4 points to 74, its highest since July 2022. The employment reading rose to 50.1 from 47.8, moving into expansion territory for the first time in three months, the ISM survey showed. "The prices index continues to trend markedly higher, and the uptick in supply chain stress and backlog of new orders suggest price pressures are building," Oxford Economics Senior US Economist Matthew Martin said in remarks e-mailed to MT Newswires, adding that the latest employment print continues to be consistent with a stable labor market. "Taken together, the (Federal Reserve) will remain focused on the inflation side of its mandate and deliver tighter monetary policy at its upcoming two meetings," Martin said. Markets are currently pricing in a 76% probability that the Fed will keep its benchmark rate steady later this month, with the remaining odds in favor of a 25-basis-point hike, according to the CME FedWatch tool. Separately, S&P Global said its services PMI increased to 58.8 in September from 56.5 the month before, marking a fourth consecutive monthly improvement and the fastest pace since July 2021, amid sharp gains in new orders. Price pressures were "substantial," with the rate of input cost inflation hitting its fastest since November 2022, while the job creation pace was the fastest since June of that year, according to the data provider. Business confidence last month reached a one-year high. Last week, separate ISM and S&P surveys showed that the US manufacturing sector continued to expand in September amid robust demand and growth in employment, though inflationary pressures remained a key concern. "Combined with the encouragingly solid manufacturing PMI, the strong service sector expansion points to economic growth of around 4% in the third quarter and 5% in September alone, the latter hinting at accelerating momentum into the fourth quarter," S&P Global Market Intelligence Chief Business Economist Chris Williamson said Monday. "Tech companies are reporting by far the strongest growth, but the rising tide is now lifting all boats as far as the major sectors are concerned." Price: 388.91, Change: +2.63, Percent Change: +0.68