US Services Sector Expands Modestly in August, ISM® Report Reveals
Washington D.C. – September 4, 2025 – The U.S. services sector demonstrated continued, albeit moderate, expansion in August 2025, according to the latest Purchasing Managers’ Index® (PMI®) report released by the Institute for Supply Management® (ISM®). The Services PMI® registered at 52.0 percent for the month, indicating growth for the 168th consecutive month. While this figure represents a slight dip from the previous month’s reading, it still signifies a healthy and expanding business environment within the services industries.
The ISM® Services PMI® is a key indicator of the economic health of the services sector, which constitutes a significant portion of the U.S. economy. A reading above 50 percent denotes expansion, while a reading below 50 percent indicates contraction. The August report suggests that the momentum in the services sector remains positive, although at a somewhat slower pace.
Several key components of the report provide further insight into the dynamics driving this expansion. The Business Activity Index, a crucial measure of production within the services sector, stood at 53.2 percent in August, down 2.1 percentage points from July’s reading of 55.3 percent. This suggests a slight moderation in the pace of overall business activity.
New Orders, a forward-looking indicator of future business, also saw a modest deceleration, with its index coming in at 51.4 percent, a decrease of 1.9 percentage points from 53.3 percent in July. While still in expansionary territory, this indicates a more measured growth in demand compared to the previous month.
Employment within the services sector showed a more robust performance. The Employment Index increased to 54.7 percent in August, up 2.2 percentage points from 52.5 percent in July. This suggests that service-based businesses were actively hiring and expanding their workforces during the month.
Prices paid by services businesses continued to rise, though at a slightly moderated pace. The Prices Index registered 56.8 percent in August, a decrease of 1.1 percentage points from 57.9 percent in July. This indicates that inflationary pressures within the services sector are still present but have eased slightly.
Customer Inventories, an indicator of the level of goods held by customers, remained in contractionary territory, with its index at 46.1 percent. This suggests that customers are continuing to draw down their existing inventories.
Supplier Deliveries, an indicator of the efficiency of supply chains, registered 49.8 percent in August, a slight decrease of 0.2 percentage points from 50.0 percent in July. This indicates that delivery times from suppliers are holding relatively steady, with a very slight lengthening of lead times.
Overall, the August 2025 ISM® Services PMI® report paints a picture of a resilient services sector that continues to grow. While there are signs of a slight moderation in some key metrics, such as business activity and new orders, the underlying strength of the sector, particularly in terms of employment, remains evident. The report provides valuable insights for businesses, policymakers, and investors seeking to understand the current state and future trajectory of the U.S. economy.
Services PMI® at 52%; August 2025 ISM® Services PMI® Report
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