ISM Non-Manufacturing Index Dips Slightly to 54.9 in September
By TopHolding Editorial · Sunday, October 4, 2026 at 8:00 PM
The ISM Non-Manufacturing index showed continued expansion in the service sector in September, reaching 54.9 despite a slight dip from the previous month. Economists at First Trust Portfolios highlight the resilience of service activity amid rising prices and a four-year high in order backlogs.
According to Braden Spiech, Economic Analyst, Brian S. Wesbury, Chief Economist, and Robert Stein, CFA, Deputy Chief Economist at First Trust Portfolios, the ISM Non-Manufacturing Index registered 54.9 in September, slightly below the consensus expectation of 55.0.
First Trust's economists note that service sector activity sustained a solid pace of expansion, with the index remaining above 53.0 for ten consecutive months, the longest such period since 2022. They observe that overall growth was broad, with thirteen out of eighteen major service industries reporting expansion. The report details that the business activity index fell to 56.5 from 61.7, and the new orders index declined to 59.8 from 60.9. Despite these declines, both forward-looking indices have shown expansion for sixteen consecutive months, leading to a rise in the backlog of orders index to 56.6, its highest level in over four years.
Spiech, Wesbury, and Stein indicate that survey comments reveal a hesitant outlook due to elevated prices and a higher interest rate environment. However, they add that some respondents reported these factors have not been enough to dampen growth. One comment from the Wholesale Trade industry, as noted by the economists, states that “Demand remains very strong.” This pressure has prompted service companies to increase payrolls, with the employment index rising to 50.1, entering expansion territory.
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The economists highlight that the prices paid index was again the highest reading among the indices, rising to 74.0 in September, marking the sixth time this year it has breached 70.0. While remaining elevated, they point out that this level is still below the peaks observed during the COVID pandemic when the index reached the low 80s.
Key terms
1. ISM Non-Manufacturing Index: An economic indicator that surveys purchasing and supply executives in the non-manufacturing (services) sector, with readings above 50 indicating economic expansion.
2. Business Activity Index: A sub-index of the ISM Non-Manufacturing report, measuring the rate of activity and production in the services sector.
3. Prices Paid Index: A sub-index of the ISM Non-Manufacturing report, reflecting changes in the prices that services businesses pay for goods and services.
Source: Braden Spiech – Economic Analyst, Brian S. Wesbury – Chief Economist, Robert Stein, CFA – Dep. Chief Economist, First Trust Portfolios — Data Watch. Read the original at ftportfolios.com.
