Catenaa, Wednesday, August 05, 2026- The US service sector expanded at a steady pace in July, bolstered by a pickup in new orders and business activity.
The Institute for Supply Management’s services index rose 0.1 point to 54.1, according to data released Wednesday. Readings above 50 indicate expansion.
New orders growth accelerated, and a measure of business activity climbed to a five-month high, pointing to resilient consumer demand. Even so, rising costs for services and materials continued to weigh on firms.
ISM’s index of prices paid jumped to 70.3 in July as the collapse of an interim deal between the US and Iran pushed oil and gasoline prices higher.
Some firms may be choosing to hold off on hiring as persistently high costs pressure profits and consumers. The group’s employment gauge signaled the sharpest contraction in headcount since March.
“Tariff impacts and the Middle East conflict continued to be mentioned by respondents, but much less frequently than in prior reports,” said Steve Miller, Chair of ISM’s Services Business Survey Committee. “The World Cup was again cited in the comments regarding increased business activity and new orders. Overall, the US services economy continues to be resilient.”
Thirteen services industries reported growth, including retail trade, transportation and warehousing, and construction. Four sectors contracted.
The government’s July jobs report, out Friday, is forecast to show solid hiring in the month. Economists estimate nonfarm payrolls, which include both factories and service-providing firms, rose about 80,000.
Wednesday’s data showed order backlogs barely grew. Measures of imports and exports, however, climbed to their highest levels since April.
Meanwhile, US private payrolls growth slowed in July, the ADP national employment report showed on Wednesday.
Private employment increased by 44,000 jobs last month after a downwardly revised 95,000 gain in June. Economists polled by Reuters had forecast private employment increasing by 70,000 after a previously reported 98,000 rise in June.
The education and health services sector accounted for the bulk of the job gains, with 36,000 positions added. But the leisure and hospitality industry shed 11,000 jobs.
There were also job losses in the trade, transportation and utilities sector as well as the natural resources and mining industry.
Modest employment gains were reported in the professional and business services sector as well as the financial activities industry. Manufacturing payrolls increased 2,000 while the construction sector added 1,000 positions.
