Services PMI® at 50.1%; July 2025 Services ISM® Report On Business®

Business Activity Index at 52.6%; New Orders Index at 50.3%; Employment Index at 46.4%; Supplier Deliveries Index at 51%

TEMPE, Ariz., Aug. 5, 2025 /PRNewswire/ — Economic activity in the services sector grew in July for the second consecutive month, say the nation’s purchasing and supply executives in the latest Services ISM^® Report On Business^®. The Services PMI^® indicated expansion at 50.1 percent, above the 50-percent breakeven point for the 12th time in the last 13 months.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management^® (ISM^®) Services Business Survey Committee: “In July, the Services PMI^® registered 50.1 percent, 0.7 percentage point lower than the June figure of 50.8 percent but in expansion territory for the second month in a row. The Business Activity Index remained in expansion in July, registering 52.6 percent, 1.6 percentage points lower than the reading of 54.2 percent recorded in June. This index has not been in contraction territory since May 2020. The New Orders Index also remained in expansion territory in July, recording a reading of 50.3 percent, a drop of 1 percentage point from the June figure of 51.3 percent. The Employment Index was in contraction territory for the second month in a row and the fourth time in the last five months; the reading of 46.4 percent is 0.8 percentage point lower than the 47.2 percent recorded in June.

“The Supplier Deliveries Index registered 51 percent, 0.7 percentage point higher than the 50.3 percent recorded in June. This is the eighth consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance. (Supplier Deliveries is the only ISM^® Report On Business^® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

“The Prices Index registered 69.9 percent in July, a 2.4-percentage point increase from June’s reading of 67.5 percent. The index has exceeded 60 percent for eight straight months, with July’s reading the highest since October 2022 (70.7 percent).

“The Inventories Index was in expansion territory in July for its second month in a row, registering 51.8 percent, a decrease of 0.9 percentage point from June’s figure of 52.7 percent. The Inventory Sentiment Index expanded for the 27th consecutive month, registering 53.2 percent, down 3.9 percentage points from June’s figure of 57.1 percent. The Backlog of Orders Index was in contraction territory for the fifth month in a row, registering 44.3 percent in July, a 1.9-percentage point increase from the June figure of 42.4 percent.

“Eleven industries reported growth in July, one more than in June. The Services PMI^® has expanded in 58 of the last 62 months dating back to June 2020. The July reading of 50.1 percent is 2.2 percentage points below the 12-month average reading of 52.3 percent.”

Miller continues, “July’s PMI^® level continues to reflect slow growth, and survey respondents indicated that seasonal and weather factors had negative impacts on business. The Employment Index’s continued contraction and faster expansion of the Prices Index are worrisome developments. The New Exports (a 3.2-percentage point decrease in July) and Imports (a 5.8-point drop) indexes, which both moved from expansion to contraction, provided signals that tariff tensions are impacting global trade. However, continued expansion in the Business Activity and New Orders indexes, together with a slight improvement in the Backlog of Orders Index, highlight the resilience of the U.S. services sector. Some respondents noted increased transportation congestion that supported the ‘slower’ Supplier Deliveries Index reading, another sign that activity levels are expanding. The most common topic among survey panelists remained tariff-related impacts, with a noticeable increase in commodities listed as up in price.”

INDUSTRY PERFORMANCE

The 11 services industries reporting growth in July — listed in order — are: Transportation & Warehousing; Wholesale Trade; Finance & Insurance; Retail Trade; Other Services; Management of Companies & Support Services; Public Administration; Real Estate, Rental & Leasing; Information; Utilities; and Health Care & Social Assistance. The seven industries reporting a contraction in the month of July — listed in order — are: Accommodation & Food Services; Construction; Mining; Educational Services; Agriculture, Forestry, Fishing & Hunting; Arts, Entertainment & Recreation; and Professional, Scientific & Technical Services.

WHAT RESPONDENTS ARE SAYING

• “Anticipation of the final tariff impacts is resulting in delayed planning for next fiscal year purchases.” [Accommodation & Food Services]
• “Higher tariffs are increasing the cost of imported feed ingredients and trace minerals for livestock and poultry feeds. Business and customer concerns over additional cost risk due to additional tariffs.” [Agriculture, Forestry, Fishing & Hunting]
• “Trade uncertainty causing client reevaluation of feasibility for projects in certain sectors, resulting in some delays or cancellations. Public-funded jobs experiencing pullbacks.” [Construction]
• “Summer break for students greatly reduces demand on campus.” [Educational Services]
• “Steady business activity.” [Finance & Insurance]
• “Tariffs are causing additional costs as we continue to purchase equipment and supplies. Though we need to continue with these purchases, the cost is significant enough that we are postponing other projects to accommodate these cost changes.” [Health Care & Social Assistance]
• “Extra purchasing to head off tariffs has leveled off. Expecting decreases in activity in the second half of 2025.” [Mining]
• “Economic uncertainty remains the dominant theme. However, the tariff talk has turned out to be much more bluster than actual policy, and businesses have seemed to tune out the noise. The outlook continues to look incrementally positive.” [Real Estate, Rental & Leasing]
• “Retail results are solid — a little soft before and during Fourth of July week, but then a rebound. We see no reason to believe this won’t continue for the near term.” [Retail Trade]
• “Our business activity is flat. We are not trending up or down. Tariffs are now starting to show up in pricing, and we are seeing increases across the board.” [Transportation & Warehousing]

Services ISM^® Report On Business^® data is seasonally adjusted for the Business Activity, New Orders, Employment and Prices indexes. Manufacturing ISM^® Report On Business^® data is seasonally adjusted for New Orders, Production, Employment and Inventories indexes.

*Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE, AND IN SHORT SUPPLY

Commodities Up in Price

Aluminum (3); Aluminum Products (2); Computers and Peripherals; Copper; Lumber*; Maintenance, Repair and Operating (MRO) Supplies; Pallets; Personal Protective Equipment (PPE); Software; Software — Licensing (2); Software Maintenance; Steel (2); Steel Products (7); Transportation; and Valves.

Commodities Down in Price

Diesel Fuel (5); Eggs; Gasoline (5); Lumber* (3); and Oriented Strand Board (OSB).

Commodities in Short Supply

Labor — Skilled; and Steel Products.

Note: The number of consecutive months the commodity is listed is indicated after each item.

*Indicates both up and down in price.

JULY 2025 SERVICES INDEX SUMMARIES

Services PMI^®

In July, the Services PMI^® registered 50.1 percent, a 0.7-percentage point decrease compared to the June reading of 50.8 percent. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates it is generally contracting.

A Services PMI^® above 48.6 percent, over time, generally indicates an expansion of the overall economy. Therefore, the July Services PMI^® indicates the overall economy is expanding for the 62nd straight month. Miller says, “The past relationship between the Services PMI^® and the overall economy indicates that the Services PMI^® for July (50.1 percent) corresponds to a 0.5-percentage point increase in real gross domestic product (GDP) on an annualized basis.”

SERVICES PMI^® HISTORY

Business Activity

ISM^®‘s Business Activity Index remained in expansion territory with a reading of 52.6 percent in July, 1.6 percentage points lower than its reading of 54.2 percent recorded in June. The Business Activity Index has not been in contraction territory since May 2020. Comments from respondents include: “Increased buying due to upcoming increase of tariffs on copper” and “Flooding across the state.”

The nine industries reporting an increase in business activity for the month of July (two fewer than in June) — listed in order — are: Wholesale Trade; Finance & Insurance; Retail Trade; Transportation & Warehousing; Public Administration; Management of Companies & Support Services; Information; Health Care & Social Assistance; and Utilities. The five industries reporting a decrease in business activity for the month of July are: Accommodation & Food Services; Mining; Agriculture, Forestry, Fishing & Hunting; Educational Services; and Construction.

New Orders

ISM^®‘s New Orders Index registered 50.3 percent in July, 1 percentage point lower than the reading of 51.3 percent in June. The index has been in expansion territory in 29 of the last 31 months. Comments from respondents include: “We continue to see strong demand driven by the build-out of artificial intelligence-related data center capacity, semiconductor industry expansion fueled by national policy, and large-scale grid modernization projects” and “New orders for defense equipment surged; non-defense orders dropped.”

The seven industries reporting an increase in new orders for the month of July — listed in order — are: Wholesale Trade; Transportation & Warehousing; Finance & Insurance; Public Administration; Other Services; Management of Companies & Support Services; and Utilities. The seven industries reporting a decrease in new orders for the month of July — listed in order — are: Accommodation & Food Services; Construction; Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Educational Services; Real Estate, Rental & Leasing; and Health Care & Social Assistance.

Employment

Employment activity in the services sector dropped further into contraction territory in July after one month of expansion in May. The Employment Index registered 46.4 percent, down 0.8 percentage point from the June figure of 47.2 percent. Comments from respondents include: “Lost a few service technicians; still difficult to recruit in this market” and “We have lost employees due to normal attrition and are having issues backfilling these positions with qualified candidates.”

The seven industries reporting an increase in employment in July — listed in order — are: Real Estate, Rental & Leasing; Transportation & Warehousing; Retail Trade; Wholesale Trade; Utilities; Finance & Insurance; and Information. The nine industries reporting a decrease in employment in July — listed in order — are: Accommodation & Food Services; Mining; Management of Companies & Support Services; Educational Services; Construction; Public Administration; Agriculture, Forestry, Fishing & Hunting; Professional, Scientific & Technical Services; and Health Care & Social Assistance.

Supplier Deliveries

In July, the Supplier Deliveries Index indicated slower supplier performance for the eighth month in a row. The index registered 51 percent, up 0.7 percentage point from the 50.3 percent recorded in June. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: “Overall, the same in terms of estimated arrival times compared to last month” and “Overseas suppliers are limiting production runs of various materials, especially electronics.”

The seven industries reporting slower deliveries in July — in the following order — are: Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Real Estate, Rental & Leasing; Management of Companies & Support Services; Finance & Insurance; Information; and Professional, Scientific & Technical Services. The four industries reporting faster supplier deliveries for the month of July are: Retail Trade; Construction; Public Administration; and Wholesale Trade. Seven industries reported no change in Supplier Deliveries in July.

Inventories

The Inventories Index registered in expansion territory for the fifth time in 2025. The reading of 51.8 percent is a 0.9-percentage point decrease compared to the 52.7 percent reported in June. Of the total respondents in July, 44 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Stocked up before tariffs; working down inventory” and “Inventory reduction efforts are in place due to lower back orders of product.”

The nine industries reporting an increase in inventories in July — in the following order — are: Accommodation & Food Services; Other Services; Retail Trade; Wholesale Trade; Educational Services; Finance & Insurance; Professional, Scientific & Technical Services; Information; and Utilities. The five industries reporting a decrease in inventories in July are: Arts, Entertainment & Recreation; Management of Companies & Support Services; Construction; Public Administration; and Health Care & Social Assistance.

Prices

Prices paid by services organizations for materials and services increased in July for the 98th consecutive month. The Prices Index registered 69.9 percent, 2.4 percentage points higher than the 67.5 percent recorded in June. The July reading is the index’s highest since October 2022 (70.7 percent), as well as its eighth straight month above 60 percent but the 33rd in a row below 70 percent.

Fifteen of the 18 services industries reported an increase in prices paid during the month of July, in the following order: Wholesale Trade; Real Estate, Rental & Leasing; Information; Transportation & Warehousing; Accommodation & Food Services; Construction; Retail Trade; Mining; Public Administration; Health Care & Social Assistance; Utilities; Management of Companies & Support Services; Other Services; Educational Services; and Professional, Scientific & Technical Services. The only industry that reported a decrease in prices paid in July is Finance & Insurance.

NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report.

Backlog of Orders

The ISM^® Services Backlog of Orders Index was in contraction territory for the fifth consecutive month, though it slightly improved in July. The reading of 44.3 percent is 1.9 percentage points higher than the 42.4 percent reported in June. Of the total respondents in July, 44 percent indicated they do not measure backlog of orders. Respondent comments include: “As we close our backlog of homes, the sales rate slowing has not replenished our backlog” and “Reduced long-term customer demands.”

The three industries reporting an increase in order backlogs in July are: Transportation & Warehousing; Wholesale Trade; and Professional, Scientific & Technical Services. The 10 industries reporting a decrease in order backlogs in July — in the following order — are: Management of Companies & Support Services; Agriculture, Forestry, Fishing & Hunting; Construction; Real Estate, Rental & Leasing; Educational Services; Retail Trade; Public Administration; Utilities; Finance & Insurance; and Health Care & Social Assistance.

New Export Orders

Orders and requests for services and other non-manufacturing activities to be provided outside of the U.S. by domestically based companies contracted for the fourth time in 2025 in July. The New Export Orders Index registered 47.9 percent, down 3.2 percentage points compared to the June reading of 51.1 percent. Of the total respondents in July, 76 percent indicated they do not perform, or do not separately measure, orders for work outside of the U.S. Respondent comments include: “New contracts will expand operations to Italy, Germany, Ireland and Thailand” and “Unpublished and subtle backlash toward U.S.-owned companies.”

The two industries reporting an increase in new export orders in July are: Information; and Utilities. The five industries reporting a decrease in new export orders in July are: Real Estate, Rental & Leasing; Accommodation & Food Services; Construction; Professional, Scientific & Technical Services; and Health Care & Social Assistance. Eleven industries reported no change in exports.

Imports

The Imports Index was in contraction territory for the fifth time in 2025, registering 45.9 percent, 5.8 percentage points lower than the 51.7 percent reported in June. The index contracted five times in 2025 but has indicated expansion in 25 of the last 35 months. Seventy-eight percent of respondents reported that they do not use, or do not track the use of, imported materials. Respondent comments include: “Planning requirements are being fulfilled for outages and storms, along with any contingency service agreements” and “Imports have increased in price, to be less competitive than domestic vendors.”

The three industries reporting an increase in imports for the month of July are: Utilities; Information; and Health Care & Social Assistance. The seven industries reporting a decrease in imports in July — in the following order — are: Retail Trade; Other Services; Management of Companies & Support Services; Educational Services; Transportation & Warehousing; Wholesale Trade; and Professional, Scientific & Technical Services. Eight industries reported no change in imports in July.

Inventory Sentiment

The ISM^® Services Inventory Sentiment Index indicated that inventories of raw materials were “too high” for the 27th consecutive month in July, registering 53.2 percent, a decrease of 3.9 percentage points from June’s figure of 57.1 percent. It was the index’s lowest reading since October 2024 (53 percent) and second-lowest since April 2023 (48.9 percent). This reading indicates that respondents feel their companies’ inventory levels are too high when correlated to business requirements.

The 11 industries reporting sentiment that their inventories were too high in July — listed in order — are: Mining; Retail Trade; Wholesale Trade; Construction; Other Services; Utilities; Information; Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Health Care & Social Assistance; and Professional, Scientific & Technical Services. The two industries reporting a decrease in order backlogs in July are: Real Estate, Rental & Leasing; and Transportation & Warehousing.

About This Report

DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report’s information reflects the entire U.S., while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of July 2025.

The data presented herein is obtained from a survey of supply executives in the services sector based on information they have collected within their respective organizations. ISM^® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation

The Services ISM^® Report On Business^® (formerly the Non-Manufacturing ISM^® Report On Business^®) is based on data compiled from purchasing and supply executives nationwide. Membership of the Services Business Survey Panel (formerly Non-Manufacturing Business Survey Committee) is diversified by NAICS, based on each industry’s contribution to gross domestic product (GDP). The Services Business Survey Panel responses are divided into the following NAICS code categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation & Warehousing; Information; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Public Administration; and Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services). The data are weighted based on each industry’s contribution to GDP. According to BEA estimates (the average of the fourth quarter 2023 GDP estimate and the GDP estimates for first, second, and third quarter 2024, as released on December 19, 2024), the six largest services sectors are: Real Estate, Rental & Leasing; Public Administration; Professional, Scientific, & Technical Services; Health Care & Social Assistance; Information; and Finance & Insurance.

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment and Supplier Deliveries), this report shows the percentage reporting each response and the diffusion index. Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The remaining indexes have not indicated significant seasonality.

The Services PMI^® is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50 percent indicates that the services economy is generally expanding; below 50 percent indicates that it is generally declining. Supplier Deliveries is an exception. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.

A Services PMI^® above 48.6 percent, over time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 48.6 percent, it is generally declining. The distance from 50 percent or 48.6 percent is indicative of the strength of the expansion or decline.

The Services ISM^® Report On Business^® survey is sent out to Services Business Survey Panel respondents in the first part of each month. Respondents are asked to ONLY report on U.S. operations for the current month. ISM^® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses to give the most accurate picture of current business activity. ISM^® then compiles the report for release on the third business day of the following month.

The industries reporting growth, as indicated in the Services ISM^® Report On Business^® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

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About Institute for Supply Management^®

Institute for Supply Management^® (ISM^®) is the first and leading not-for-profit professional supply management organization worldwide. Its community of more than 50,000 in more than 100 countries around the world manage about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 by practitioners, ISM is committed to advancing the strategy and practice of integrated, end-to-end supply chain management through leading edge data-driven resources, community, and education to empower individuals, create organizational value and to drive competitive advantage. ISM’s vision is to foster a prosperous, sustainable world. ISM empowers and leads the profession through the ISM^® Report On Business^®, its highly regarded certification and training programs, corporate services, events and assessments. The ISM^® Report On Business^®, Manufacturing, Services, and Hospital are three of the most reliable economic indicators available, providing guidance to supply management professionals, economists, analysts, and government and business leaders. For more information, please visit: www.ismworld.org.

The full text version of the Services ISM^® Report On Business^® is posted on ISM^®‘s website at www.ismrob.org on the third business day* of every month after 10:00 a.m. ET. The one exception is in January, the report is released on the fourth business day of the month.

The next Services ISM^® Report On Business^® featuring August 2025 data will be released at 10:00 a.m. ET on Thursday, September 4, 2025.

*Unless the New York Stock Exchange is closed.

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SOURCE Institute for Supply Management