ISM® PMI® Reports Roundup: June Services

With many of the nation’s sports fans immersed in World Cup fever, the kick could have been felt in the ISM^® Services PMI^® Report for June.

The composite PMI^® reading was down slightly to 54 percent, but the Employment Index expanding for the first time in four months was one of the most positive developments. Some panelists noted that hiring was due in part to soccer fans from around the globe filling stadiums and spending money on airfare, hotels and restaurants. The fastest-growing services sector in June was Arts, Entertainment & Recreation (AE&R).

June ISM Services PMI fell to 54.0 vs. 54.0 est. & 54.5 prior; new orders down to 55.1 vs. 57.3 prior; employment up to 51.2 vs. 47.9 prior; prices paid down to 67.7 vs. 71.3 prior pic.twitter.com/0umFnrTVLc

— Liz Ann Sonders (@LizAnnSonders) July 6, 2026

It’s a dynamic that has been seen before. Since the impact of big events is limited because such industries as AE&R, Accommodation & Food Services and Transportation & Warehousing are small segments of sector gross domestic product, the World Cup “was not a driver, but it was certainly welcome,” Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management^® (ISM^®) Services Business Survey Committee, said after the report was released on Monday.

Among the more tangible factors:

• Oil and gas prices moderating due to the ceasefire and negotiations between the U.S. and Iran, which helped the Prices Index (67.7 percent) fall below 70 percent for the first time in four months.
• Real Estate, Rental & Leasing (the largest services industry) returning to expansion.
• Steady demand, as the Business Activity (55.4 percent) and New Orders (55.1 percent) declined but still indicated robust growth, and the Backlog of Orders Index (54.9 percent) increasing 3.6 percentage points compared to June.

“These readings and developments, taken with respondent commentary, seem to indicate that supply chains are stabilizing amid sustained business activity,” Miller told a conference call of reporters. “That’s giving confidence to business, especially for sustained and modest hiring.”

There were mixed results on other jobs data last week, but the ISM Employment Index readings were positive: Manufacturing was close to expansion at 49.7 percent, and the Services gauge was up 3.3 percentage points in June to 51.2 percent. Of companies surveyed, 16 percent reported hiring, up from 13.5 percent in May, while 10.9 percent reduced head counts, down from 17.2 percent.

“The good news is there’s no indication from the commentary that employment is driving pricing levels,” Miller said.

Meanwhile, fuel and petroleum based products continued to be listed as up in price in June, which Miller said that trend should continue while expensive oil bought in the last two or three months works its way through supply chains.

“We’ll keep fingers crossed that we continue to see an easing of the pricing pressure, but an index reading of 67.7 percent in June this is still one of the higher numbers since the end of the coronavirus pandemic,” he said. “But it was nice to see a little bit slower growth.”

The new orders - employment spread in the ISM Services PMI was soaring earlier this year (consistent with stronger productivity) but has since come back down pic.twitter.com/agHoK6TTyX

— Kevin Gordon (@KevRGordon) July 6, 2026

Perhaps the most interesting commodities list was those reported in short supply. After the May report, this space noted that the services sector will stay tuned on the impact of AI and data center financing and construction.

Miller noted that all of the commodities listed in shortage — including computers and related items, electronic components, memory components (for a sixth straight month), steel products, switchgear, and wire and cable — are necessary to build data centers.

“It’s a red flag on the horizon,” he said. “There is some risk that companies won’t be able to get what they need, and pricing for memory in particular has gone way up. If things remain in short supply, that could create constraints.”

After tying its all-time high reading in May, the Inventories Index flattened to 51.2 percent, an 11.3-percentage point decrease. With the Inventory Sentiment Index (52.6 percent) hitting its lowest reading since April 2023 and the Imports Index (49.4 percent) contracting, that suggests there was little panic buying due to tariffs.

However, Miller said he was surprised at the level of tariffs-related comments from panelists, a dynamic worth watching with the 150-day limit on the Section 122 replacement tariffs expiring later this month, and the Trump administration vowing to respond with new levies.

There are continuing X-factors, but Miller noted that the Services PMI^® is above its 12-month averages, as are all four of the subindexes (Business Activity, New Orders, Employment and Supplier Deliveries) that directory factor into the composite reading. That means there is cushion for the sector to withstand a shock.

The ISM^® PMI^® Reports roundup:

Bloomberg: U.S. Service Sector Expands at a Slower Pace, Hiring Picks Up. “An interim deal between the U.S. and Iran has led the prices of oil and gasoline to drop in recent weeks, following a war-driven surge. While companies continue to face other cost pressures, such an easing — paired with resilient consumer demand — may have offered firms more space to pursue hiring plans.”

Logistics Management: Services Economy Grows for the 24th Consecutive Month in June. “(Miller) observed that comments about the war are getting the same amount of attention as other topics, like tariffs and oil — while also noting that the coming months will be interesting to monitor, especially as it relates to energy prices.”

The ISM Services PMI edged lower to 54.0 in June, driven by slower growth in business activity and new orders. Positively, the employment index climbed into expansion territory, while the prices paid index eased alongside the manufacturing sector. pic.twitter.com/6ZJSnlicri

— Cetera Investment Management (@ceteraIM) July 6, 2026

Reuters: U.S. Service Sector Growth Dips in June; Employment Rebounds After Months of Contraction. “Most economists continued to expect that the Federal Reserve would hike interest rates this year, despite job growth slowing considerably in June and revisions showing nonfarm payroll gains in the prior two months were not as strong as previously reported. The ISM survey, however, strengthened economists' views that the labor market remained in a ‘low hire, low fire’ state.”

The Wall Street Journal: U.S. Services-Sector Activity Continued to Expand in June. “The prices index decreased to 67.7 percent in June, its first time below 70 percent since February. Diesel, gasoline, oil and related commodities were once again most frequently mentioned as up in price in June — and cited as down in price from other respondents, said the report.”

In case you missed last week’s ISM^® PMI^® Reports Roundup on the release of the June ISM^® Manufacturing PMI^® Report, you can read it here. For the most up-to-date content on the reports under the ISM^® PMI^® Reports umbrella, use #ISMPMI on X, formerly known as Twitter.

(Photo credit: Getty Images/Johnrob)