TEMPE – November 04, 2026 -- The ISM Services PMI registered 54.5 percent in October, the 28th consecutive month of expansion, while the Prices Index held at 73 percent and the Backlog of Orders Index climbed to 58 percent, its highest reading since July 2022.
The headline figure is down 0.4 percentage point from September's 54.9 percent. It sits 0.2 percentage point above the 12-month average of 54.3 percent. That average has now risen for 10 straight months.
Business Activity and New Orders Cool, While Employment Strengthens
The Business Activity Index fell 2.7 percentage points to 53.8 percent from 56.5 percent. The New Orders Index dropped 3.9 percentage points to 55.9 percent from 59.8 percent. Both readings are below their 12-month averages.
The Employment Index rose 1.3 percentage points to 51.4 percent from 50.1 percent, its second consecutive month in expansion. It is 2.1 percentage points above its 12-month average of 49.3 percent. For the first time since February 2026, all 10 indexes tracked in the report were in expansion territory.
Prices Index Exceeds 60 Percent for 23 Straight Months
The Prices Index registered 73 percent, 1 percentage point below September's 74 percent. It has topped 70 percent in seven of the past eight months. Its 12-month average rose 0.2 percentage point to 69.2 percent, the highest since April 2023.
No commodities were reported down in price. Fuel was up for a ninth consecutive month, and memory products for a 10th. Copper (11 months), diesel fuel (8 months) and steel products (7 months) also remained on the price-increase list.
Steve Miller, Chair of the ISM Services Business Survey Committee, said respondents are not yet seeing the full impact of tariff and fuel cost escalations, or have not passed them through to customers. He warned that more pricing pressure is coming if oil and tariff impacts are not mitigated, even if they do not rise from current levels.
Supplier Deliveries Slow Further as Shortages Narrow to Three Commodities
The Supplier Deliveries Index rose 3.5 percentage points to 56.7 percent from 53.2 percent, the 23rd consecutive month of slower deliveries. It is the second-highest reading since July 2022, behind only April 2026 at 56.8 percent. A reading above 50 percent indicates slower deliveries.
Commodities in short supply fell from seven to three: computers and related products, memory components and wire and cable. Miller noted the Employment Index's second reading above 50 percent may indicate help is on the way for slowing deliveries and growing backlogs.
Export Orders Rebound 8.3 Points While Inventories Ease
The New Export Orders Index returned to expansion at 55.2 percent from 46.9 percent in September. The Imports Index rose 1.3 percentage points to 54.2 percent, a fourth straight month of expansion.
The Inventories Index fell 2.4 percentage points to 55.4 percent. The Inventory Sentiment Index rose 0.4 percentage point to 52.1 percent, its 42nd consecutive month of expansion.
Fifteen Industries Report Growth, Construction and Health Care Contract
Fifteen industries reported growth, two more than in September. Transportation & Warehousing, Wholesale Trade, Information and Retail Trade led the list. Construction and Health Care & Social Assistance were the two reporting contraction, two fewer than the prior month.
Respondents cited tariffs and fuel costs as the most common supply chain issues. A Wholesale Trade respondent said Section 301 duties in force since late July raised duties on Southeast Asian canned and dry goods, and expects U.S. East Coast port congestion in November. A Retail Trade respondent said tariffs are causing havoc with international merchandise sourcing.