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August 2026 ISM Services PMI Report

The latest ISM® Services PMI® Report reveals a continuing expansion in the services sector for August 2026, reflecting positive economic conditions as purchasing and supply executives report growth. The Services PMI registered a solid 55.4%, marking the 26th consecutive month in which the index has remained above 50%, indicating a sustained climate of expansion.

Key Findings

Steve Miller, the Chair of the Institute for Supply Management® Services Business Survey Committee, reported that the Services PMI saw an increase of 1.3 percentage points from last month's reading of 54.1%. The Business Activity Index showed a notable rise, jumping 2.6 percentage points to 61.7%, indicating robust growth in business activities compared to the preceding month.

In terms of new orders, the index reached 60.9%, which is a marked increase of 3.7 percentage points from July's 57.2%. This sustained growth in new orders suggests organizations are better positioned for future demand, even amidst potential supply chain challenges.

However, amidst these indicators of growth, the Employment Index was a concern, with a reading of 47.8% indicating a contraction for the second month in a row, even if it showed a slight increase from 47.4% in July. Recruitment challenges continue to plague sectors like accommodation, food services, and healthcare, where talent shortage is becoming an increasingly pressing issue.

Economic Indicators Overview

The Supplier Deliveries Index reflected slower supplier performance, marking 51.3%, which is 1.5 percentage points lower than the 52.8% noted in July. This continuous pattern of slower deliveries has persisted for 21 months, often linked to the increase in customer demand and the subsequent strain on suppliers’ capabilities.

On the pricing front, the Prices Index stood at 72.6%, surpassing the 70% threshold for the fifth time in six months. This increase can be attributed to continuous inflationary pressures across various commodities. Key commodities like petroleum and GPU components are still under significant price pressures, causing challenges for manufacturers and service providers alike.

Sector Performance

Interestingly, twelve industries have reported growth in August, including significant players like Mining, Real Estate, and Accommodation & Food Services. On the flip side, five industries—including Agriculture and Construction—recorded contraction, suggesting a divergence in performance across sectors which might indicate sector-specific economic challenges.

Respondents' Sentiment

Many survey respondents expressed cautious optimism about business conditions, though concerns regarding geopolitical events and fluctuating tariffs were prevalent. The bond market's influence on mortgage rates was also noted, as rising rates are displacing prospective buyers from the housing market, impacting related sectors.

One respondent from the accommodation sector mentioned, "General business conditions are positive, but managing through tariffs and geopolitical conflicts has created cost headwinds that we must navigate carefully."

Conversely, a professional within the construction industry cautioned that rising interest rates are influencing affordability, thus modifying expectations around new builds and renovations. High turnover rates prompted by competition from local defense contractors in some regions have also added to employment headaches in various sectors.

Conclusion

The overall interpretation of the August 2026 ISM® Services PMI® indicates a resilient services sector on the brink of further expansion. The overall economic outlook remains favorable, although challenges in hiring and supply chains persist and require strategic attention moving forward. With supplier deliveries continuing to lag while pricing pressures mount, businesses will need to remain agile and forward-thinking.

The Services PMI offers a comprehensive snapshot of economic vitality in the services sector, and its findings underscore a path of growth tempered with the need for strategic resource and workforce management. As we close out the summer months, the expectation is that this trend could shift as organizations adapt to evolving market conditions and consumer demands.