US Services Sector Growth Slows in July Amid Rising Prices

TEMPE, Ariz., Aug. 5, 2025 /PRNewswire/ — Economic activity in the U.S. services sector showed signs of growth in July, but the expansion slowed as new orders and employment levels declined, according to the latest Services ISM® Report On Business®.

The Services Purchasing Managers’ Index (PMI) recorded 50.1 percent, dipping from 50.8 percent in June. Despite this decrease, it marks the 12th month of growth, although it fell short of analysts’ expectations for a reading of 51.5 percent.

Steve Miller, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee, noted, “In July, the Services PMI® registered 50.1 percent, indicating a smaller rate of growth compared to the previous month.”

The Business Activity Index was at 52.6 percent, down from 54.2 percent in June, showing sustained expansion. The New Orders Index also recorded a decline, at 50.3 percent compared to 51.3 percent previously. The Employment Index fell into contraction at 46.4 percent, continuing a troubling trend for the second month.

The report highlighted that the Supplier Deliveries Index registered 51 percent, showing slower delivery performance for the eighth consecutive month, which suggests an increase in customer demand.

Inflation pressures are evident, as the Prices Index surged to 69.9 percent, up from 67.5 percent in June, indicating continued increases in costs.

“July’s PMI level reflects slow growth,” said Miller. “Survey responses indicated seasonal and weather factors had negative impacts on business operations.”

The report indicated growth across 11 industries, including Transportation & Warehousing and Retail Trade, while seven sectors, such as Accommodation & Food Services and Construction, reported contraction.

Overall, this latest data points to a mixed picture for the U.S. services sector, balancing signs of resilience with concerns over employment and inflation. The ongoing impacts of tariff tensions on global trade were also noted by survey participants as a factor affecting business conditions.