US services sector continues to expand as inflation pressures linger

4th Nov 2026 15:09

(Sharecast News) - US services sector growth remained solid in October, according to both S&P Global and the Institute for Supply Management, although rising costs and growing uncertainty continued to weigh on business confidence.

S&P Global's services PMI eased to 56.1 from 58.8 in September, while the ISM's services PMI edged down to 54.5 from 54.9. However, both readings remained comfortably above the 50-point mark that signals expansion.

S&P said firms reported strong demand and a healthy pipeline of new work, supporting another sharp increase in business activity and employment. Export demand strengthened for a third consecutive month, while backlogs rose at the fastest pace in four-and-a-half years, suggesting capacity remained stretched.

The ISM survey also pointed to continued growth in demand, with its new orders index registering 55.9, although that was down from September's 59.8. Employment improved for a second straight month, rising to 51.4.

Inflation remained a key concern across both surveys, with S&P noting that higher fuel costs drove operating expenses higher and prompted the fastest increase in selling prices since July, while ISM's prices index stayed elevated at 73.0. Survey respondents also cited tariffs and supply chain pressures as ongoing challenges.

S&P's composite PMI, which combines manufacturing and services activity, slowed to 55.9 from 58.4, indicating private-sector growth moderated but remained robust.

Reporting by Iain Gilbert at Sharecast.com