The Services PMI (Purchasing Managers’ Index) is an essential indicator of the services sector’s health, covering finance, retail, healthcare, and hospitality. A PMI above 50 signals growth, while below 50 indicates a slowdown.
Two key organizations publish these reports:
- S&P Global: This Services PMI surveys a wide range of service sector companies in the U.S. and globally. It’s known for its extensive sample size and advanced methodology, providing early and detailed business condition insights.
- Institute for Supply Management (ISM): The ISM’s Non-Manufacturing PMI includes data from purchasing and supply executives across various industries, such as construction, utilities, and government administration. This survey, with its long history, focuses more on larger companies.
Both indices are closely monitored by economists and investors for valuable information about services sector performance and trends. A PMI above 50 indicates sector expansion, while below 50 signals contraction.
June S&P Global Services PMI
In June 2025, the S&P Global US Services PMI registered 52.9, signaling continued growth in the services sector, though at a slower pace than May’s 53.7 reading. This marks the 29th consecutive month of expansion, but momentum has clearly softened compared to the strong gains seen in late 2024. New business activity rose modestly, driven mainly by domestic demand, while international sales declined for the third straight month due to lingering tariff and trade policy uncertainties.
Tariffs also contributed to rising operating costs, with firms reporting higher supplier prices and wage expenses. Although inflation pressures eased slightly from May’s peak, they remained elevated. Despite subdued confidence in the outlook, businesses were optimistic enough to increase hiring, with job creation reaching its fastest pace in five months.
Overall, the data reflects a resilient but cautious services sector navigating inflation and global trade headwinds.
June ISM Services PMI
In June 2025, the US Services PMI rose to 50.8, signaling a return to expansion after May’s slight contraction. This reading suggests the overall economy is still growing, corresponding to a 0.7% annualized increase in real GDP.
Business activity and new orders both picked up, with the Business Activity Index climbing to 54.2 and New Orders reaching 51.3. However, employment in the services sector slipped back into contraction, with the index falling to 47.2, as firms paused hiring due to budget uncertainty and internal reshuffling.
Supplier deliveries slowed for the seventh straight month, and inventories expanded as companies stocked up ahead of potential tariff impacts. Prices paid remained high at 67.5, marking the 97th consecutive month of inflationary pressure, though slightly cooler than May. Export orders and imports both returned to growth, reflecting stronger international demand and supply chain adjustments.
Overall, the data paints a picture of cautious optimism, with growth sustained but tempered by inflation and policy concerns.
Impacts of Reports on Stock Market
The latest reports from S&P Global and ISM show that the US services sector is still growing, although not as quickly as before. The S&P Global Services PMI still above the 50-mark, signals expansion. The ISM Services PMI improved to 50.8, bouncing back into growth territory after a dip last month.
Together, the data suggests that the economy remains stable, with businesses continuing to see new orders and activity, mostly driven by domestic demand.
Inflation pressures, while still present due to tariffs, eased slightly, helping confidence. Investors grew more hopeful about potential interest rate cuts later in the year, especially with hiring slowing and prices not surging. All in all, the services data added to the upbeat tone already set by strong job numbers.
This positive news gave a boost to the stock market. The S&P 500 reached a record high, as investors responded to signs that the economy is solid without showing overheating.
