Services Sector Continues to Grow Amid Tariff-Related Inflation Concerns, ISM, S&P Surveys Show

12:57 PM EDT, 09/04/2025 (MT Newswires) -- The US services sector saw continued growth in August, though there were tariff-related inflation concerns among firms, two separate surveys by the Institute for Supply Management and S&P Global (SPGI) showed Thursday.

The ISM's purchasing managers' index rose to 52 last month from 50.1 in July. The consensus was for 51 print in a survey compiled by Bloomberg. A reading above 50 indicates the services sector economy is generally expanding.

The business activity gauge increased to 55 from 52.6, while new orders improved to 56 from 50.3. The employment measure edged up to 46.5 from 46.4, but remained in contraction territory for the third straight month. The prices index declined to 69.2 from 69.9, but recorded its second-highest reading since November 2022, according to the survey.

"Commentary once again was led by respondents' increasing citations of tariff impacts, with some indication that business activity and imports are being driven by an attempt to get ahead of additional price increases while preparing for the holiday peak season," Steve Miller, chair of the ISM's services business survey committee, said in a statement.

On Wednesday, US President Donald Trump reportedly filed an appeal with the Supreme Court to uphold his reciprocal tariffs, after the US Court of Appeals for the Federal Circuit recently ruled that most of them were illegal.

S&P Global (SPGI) said Thursday that its services PMI gauge moved down to 54.5 last month from 55.7 in July, but was still the second-highest reading of this year amid a "marked uptick" in new business volumes. Staffing levels rose for a sixth consecutive month, though the overall business outlook was subdued, according to the data provider.

"Business optimism regarding the year ahead outlook has dropped to one of the lowest levels seen over the past three years amid escalating worries over the uncertainty and drop in demand caused by federal government policy, most notably tariffs, as well as the associated rise in price pressures," S&P Global Market Intelligence Chief Business Economist Chris Williamson said.

The S&P survey data indicate "some downside risks" to growth in the months ahead while signaling upside risks to inflation, as import tariffs feed through to prices charged for goods and services, Williamson added.

On Tuesday, an ISM survey showed continued contraction in the US manufacturing sector for August, while an S&P Global (SPGI) report pointed to a rebound to expansion.

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