Hiring
U.S. services employers showed a tentative return to hiring growth in September, according to the Institute for Supply Management’s monthly services survey released October 5.
ISM’s Services Employment Index rose to 50.1 from 47.8 in August. A reading above 50 indicates expansion, making September the first reading in expansion after two consecutive months of contraction.
“The Employment Index (50.1 percent) returned to slight expansion after two months in contraction while also moving above its 12-month average of 49 percent,” said Steve Miller, chair of ISM’s Services Business Survey Committee.
A narrow improvement
The gain was narrow. In September, 16.5% of survey respondents reported higher employment and 16.2% reported lower employment, while 67.3% reported no change.
Seven services industries reported employment growth: accommodation and food services; wholesale trade; educational services; real estate, rental and leasing; transportation and warehousing; retail trade; and professional, scientific and technical services.
Eight reported declines: management of companies and support services; mining; agriculture, forestry, fishing and hunting; health care and social assistance; construction; utilities; finance and insurance; and public administration.
Why ISM thinks hiring picked up
The broader Services PMI remained in expansion at 54.9, although it eased from 55.4 in August. New orders stayed strong at 59.8, down from 60.9, and the backlog of orders index rose to 56.6 from 55.6.
Miller tied the employment improvement to that activity. “The Employment Index’s first reading above 50 percent in three months seems to have resulted from increasing backlogs, as well as high levels of business activity and new orders,” he said.
Respondents’ comments pointed in more than one direction. One said the company was “filling positions that have been vacated due to promotions or retirements,” while another cited “restructuring due to efficiencies gained using AI tools.”
Prices are running hot
ISM’s Prices Index climbed to 74.0 from 72.6 in August. “The Prices Index registered above 70 percent for the sixth time in seven months,” Miller said, and September’s reading was “the highest since July 2022 (74.5 percent).”
ISM did not link the price increases to employers’ hiring decisions, and the survey does not show how much of September’s employment change came from new positions rather than replacements.
One month above 50 after two months of contraction is a turn worth watching, not yet a durable hiring trend. The survey is a diffusion index that measures how many companies report more or less employment, not how many jobs were added.
What to watch: October’s services employment reading, due in early November, and whether employment growth spreads beyond seven industries.
Sources
- Institute for Supply Management, “Services PMI Report — September 2026,” October 5, 2026. https://www.ismworld.org/supply-management-news-and-reports/reports/ism-pmi-reports/services/september/
Featured photo: A server carries a tray of coffee through a busy café. Accommodation and food services was among the seven industries reporting employment growth in ISM’s September services survey. Representative image; not connected to the survey. Photo: Nenad Stojković (Shixart1985), via Wikimedia Commons (CC BY 2.0). Cropped from the original.
