Services Sector Remained in Expansion During September

Business owners in services should note that while expansion continued, rising input costs signal ongoing pressure on margins.

Updated on Oct. 5, 2026 in Economic Indicators

Bold vector editorial illustration featuring stacked shipping containers against a cream background, representing service sector expansion. — The U.S. services sector expanded for the month of September, with the ISM Services Index hitting 54.9 amid rising input costs. AI Illustration. Upload story photo >

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The ISM Services Index reached 54.9 in September 2026, indicating continued growth across the sector. This expansion follows an August reading of 55.4, keeping the index consistently above the 50-point threshold that separates growth from contraction.

Why it matters

The continued expansion supports ongoing consumer spending and credit health for service-oriented businesses. However, the data reflects a complex operating environment where labor markets are tightening while input cost pressures remain elevated.

The ISM Services Index registered at 54.9 in September versus 55.4 in August, maintaining a pace above the 50-point threshold. Additionally, the Prices Paid index rose to 74 from 72.6 in the prior month, reflecting increased overhead pressure.

The details

The sector remains in growth territory as new orders reached 59.8, though this represents a slight deceleration from the 60.9 recorded in August. Crucially, the Employment Index crossed back into expansion territory at 50.1, up from 47.8, suggesting that service providers are adding staff despite higher supply-side costs indicated by the 74 reading on the Prices Paid index.

August 2026 provided a baseline with a 55.4 index reading.
September 2026 saw the index reach 54.9.

Market Landscape

The ISM Services Index methodology provides a standardized framework for tracking expansion, and this reading updates the established trend line. The sector continues to demonstrate resilience against the benchmark 50-point threshold used to track economic cycles.

Operators should prepare for sustained inflationary pressure on inputs given the increase in the Prices Paid index to 74. Monitor your labor cost projections, as the move in the Employment Index to 50.1 indicates a potential shift in hiring demand.

The takeaway

The sector has maintained growth, providing a stable backdrop for planning service-based business strategies. Keep a close watch on the Prices Paid metric, as it remains a key indicator of cost-side volatility for the coming quarter.