The ISM Services index slipped 0.5 points from 54.5 in May to 54.0 in June, remaining in expansionary territory for a 24th consecutive month.
The ISM Services PMI in the US edged down to 54.0 in Jun-26 from 54.5 in May-26, matching market expectations and signaling a still solid, though softer, expansion in services activity. This moderation was primarily driven by a pullback in both business activity (55.4; May-26: 57.7) and new orders (55.1; May-26: 57.3). Conversely, the employment index experienced its largest surge since 2024, rebounding to 51.2 (May-26: 47.9) to mark the first expansion since Feb-26. On the price front, input cost inflation cooled to a four-month low of 67.7, helping mitigate underlying anxieties regarding supply disruptions stemming from ongoing Middle East tensions.
In a separate release, this was reinforced by the S&P Global US Services PMI, which climbed to 51.2 in Jun-26 (May-26: 50.7). This print represented the fastest pace of expansion for the index since the outbreak of regional conflict in the Middle East triggered a global energy shock, with new business growth getting a significant boost from an influx of high-spending international tourists and major events tied to the US-hosted FIFA World Cup.
Despite the divergence between a softer ISM PMI and accelerating S&P Global index, continued growth in the services sector points to resilient US consumer demand, temporarily lifted by spending related to the World Cup. While expanding payrolls and cooling input prices are encouraging, this demand surge is seasonal. As event-led momentum fades, slowing new orders (as indicated in the ISM report) suggests the broader economy remains on a path toward gradual moderation. However, the combination of resilient macroeconomic growth, a stable labour market, and elevated inflation continues to support expectations for policy tightening by the Fed later this year if inflation proves persistent.
