The January 2026 ISM® Services PMI® Report reveals a steady economic pulse in the services sector, with a 53.8% reading, mirroring December's adjusted figure. This marks the 19th consecutive month of expansion, a positive trend since ISM's seasonal adjustments. The report, issued by Steve Miller, highlights the Business Activity Index at 57.4%, New Orders at 53.1%, Employment at 50.3%, and Supplier Deliveries at 54.2%.
But here's where it gets interesting: the report reflects annual adjustments to seasonal factors, potentially impacting the indexes. The Business Activity Index, a key indicator, surged by 2.2 percentage points, while New Orders dipped slightly. Employment expanded for the second month, but the Prices Index crept up, raising concerns.
And this is the part most people miss: the Supplier Deliveries Index, often overlooked, showed slower performance for 14 months straight. This index is unique, indicating slower deliveries when above 50%, which is typical as the economy improves. The Prices Index, however, has been on the rise for 14 months, now 0.2% above its 12-month average, a trend to watch.
The report also highlights industry performance, with 11 sectors reporting growth and 5 contracting. Respondents shared insights, revealing the impact of tariffs and AI on purchasing decisions. The report provides a comprehensive overview of the services sector's health, but the question remains: will the pricing increases stick or expand, and what does this mean for the overall economy?
