ISM Services Survey Shows Surprise Stagnation; S&P Data Indicate Growth Slowdown

01:01 PM EDT, 10/03/2025 (MT Newswires) -- Two surveys released Friday painted a mixed picture of the US services sector for September, with Institute for Supply Management data showing a surprise stagnation and S&P Global (SPGI) indicating slight deceleration in growth.

The ISM's purchasing managers' index dropped to 50 last month from 52 in August. The consensus was for a 51.7 print in a survey compiled by Bloomberg. A reading above 50 indicates the services sector economy is generally expanding, while a print below that level suggests a contraction.

The business activity measure fell to 49.9 in September -- its first contraction since May 2020 -- from the previous month's reading of 55, the ISM said. New orders fell to 50.4 from 56, while employment improved to 47.2 from 46.5, but extended its contraction streak to four months.

"Commentary in general indicated moderate or weak growth, with more isolated observations of supplier delivery challenges," Steve Miller, chair of the ISM's services business survey committee, said in a statement. "Employment continues to be in contraction territory, thanks to a combination of delayed hiring efforts and difficulty finding qualified staff."

As a federal government shutdown entered its third day, key economic data, including Friday's official nonfarm payrolls report for September, was delayed.

"With the Federal Reserve potentially having to deliberate with less data than usual, the importance of the ISM index has increased," Vikram Rai, senior economist at TD Economics, said in a report. "This (ISM) report will help firm expectations for the (Fed) to continue cutting at its next meeting."

On Wednesday, a report by Automatic Data Processing (ADP) showed US private jobs decreased by 32,000 last month as employers remained "cautious" with hiring.

Separately, S&P Global (SPGI) said Friday its services PMI gauge ticked down to 54.2 in September from 54.5 in August. Selling prices increased at weakest rate in five months, though sentiment about the outlook "strengthened," aided by the prospects of lower interest rates, the data provider said.

"Service sector growth softened slightly in September but remained strong enough to round off an impressive performance over the third quarter a whole," S&P Global Market Intelligence Chief Business Economist Chris Williamson said. "Disappointingly, the improvement in business optimism failed to spur more jobs growth, with hiring almost stalling in a sign of further labor market malaise as companies often focused on running more efficiently amid uncertain trading conditions."

Earlier this week, ISM data showed a seven straight monthly contraction in US manufacturing sector activity for September, while S&P Global (SPGI) indicated growth losing steam amid tariffs-related concerns.

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