Services PMI Continues Steady Growth in January 2026: Key Insights Revealed
The Institute for Supply Management® (ISM®) has recently published its Services PMI® Report for January 2026, showcasing persistent growth in the services sector. The report reveals that the Services PMI® maintained a stable reading of 53.8 percent, mirroring December's performance. This stability marks the continuation of growth for the 19th consecutive month, indicating a consistent recovery process post the pandemic downturn.
The report details several key indexes: the Business Activity Index surged to 57.4 percent, a notable increase from December's figure of 55.2 percent. This uptick suggests that business activity is gaining momentum, further emphasizing the economic uptick. However, the New Orders Index showed a mild decline, resting at 53.1 percent, down from 56.5 percent in December. While still in expansion territory, this decline raises questions about future demand dynamics.
The Employment Index reflected stability, registering 50.3 percent, but this was a slight drop from the previous month. The moderating trends in employment indicate industry respondents are navigating workforce-related shifts, possibly influenced by economic uncertainties and changes in operational dynamics. Meanwhile, the Supplier Deliveries Index climbed to 54.2 percent, signaling slower delivery performance—a typical characteristic of an improving economy, which could suggest rising customer demand.
Inflationary pressures are evident, as the Prices Index recorded at 66.6 percent, higher than both December's level and its 12-month average. This sustained price increase, now over 60 percent for 14 consecutive months, highlights inflation challenges facing businesses. On the other hand, the Inventories Index dropped to 45.1 percent, indicating a contraction, which may reflect supply chain adjustments or changes in consumption patterns post-holiday season.
January's report classified industries into two groups: those reporting growth and those contracting. Eleven sectors displayed growth including Health Care, Utilities, and Construction, reflecting resilience across various service industries. Conversely, five sectors showed contraction, including Transportation and Management of Companies, indicating that recovery is uneven across the landscape.
Feedback from survey participants revealed critical insights into ongoing challenges and emerging opportunities. Comments noted ongoing uncertainties surrounding U.S. tariff policies affecting procurement strategies, alongside optimism regarding capital investments from clients. For instance, one respondent highlighted the anticipation of a surge in capital investments in data centers, reflecting a redirection of business focus to technology and infrastructure due to evolving market needs.
As the Services PMI® holds steady at 53.8 percent, it illustrates a cautiously optimistic view of the services sector's recovery trajectory entering 2026. The interplay of increasing prices and moderated new orders suggests businesses may need to adapt quickly to maintain their growth. Stakeholders are encouraged to monitor these trends closely, addressing both the challenges of inflation and the dynamics of evolving service demands in this complex economic climate. The January report is both a clear signal of sustained expansion in the services sector and a prompt for businesses to strategize in response to changing market conditions as the year unfolds.
Index Overview
The report details several key indexes: the Business Activity Index surged to 57.4 percent, a notable increase from December's figure of 55.2 percent. This uptick suggests that business activity is gaining momentum, further emphasizing the economic uptick. However, the New Orders Index showed a mild decline, resting at 53.1 percent, down from 56.5 percent in December. While still in expansion territory, this decline raises questions about future demand dynamics.
The Employment Index reflected stability, registering 50.3 percent, but this was a slight drop from the previous month. The moderating trends in employment indicate industry respondents are navigating workforce-related shifts, possibly influenced by economic uncertainties and changes in operational dynamics. Meanwhile, the Supplier Deliveries Index climbed to 54.2 percent, signaling slower delivery performance—a typical characteristic of an improving economy, which could suggest rising customer demand.
Prices and Inventories
Inflationary pressures are evident, as the Prices Index recorded at 66.6 percent, higher than both December's level and its 12-month average. This sustained price increase, now over 60 percent for 14 consecutive months, highlights inflation challenges facing businesses. On the other hand, the Inventories Index dropped to 45.1 percent, indicating a contraction, which may reflect supply chain adjustments or changes in consumption patterns post-holiday season.
Industry Insights
January's report classified industries into two groups: those reporting growth and those contracting. Eleven sectors displayed growth including Health Care, Utilities, and Construction, reflecting resilience across various service industries. Conversely, five sectors showed contraction, including Transportation and Management of Companies, indicating that recovery is uneven across the landscape.
Respondent Feedback
Feedback from survey participants revealed critical insights into ongoing challenges and emerging opportunities. Comments noted ongoing uncertainties surrounding U.S. tariff policies affecting procurement strategies, alongside optimism regarding capital investments from clients. For instance, one respondent highlighted the anticipation of a surge in capital investments in data centers, reflecting a redirection of business focus to technology and infrastructure due to evolving market needs.
Conclusion
As the Services PMI® holds steady at 53.8 percent, it illustrates a cautiously optimistic view of the services sector's recovery trajectory entering 2026. The interplay of increasing prices and moderated new orders suggests businesses may need to adapt quickly to maintain their growth. Stakeholders are encouraged to monitor these trends closely, addressing both the challenges of inflation and the dynamics of evolving service demands in this complex economic climate. The January report is both a clear signal of sustained expansion in the services sector and a prompt for businesses to strategize in response to changing market conditions as the year unfolds.
Topics General Business）
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