June 2025 Services ISM® Report: PMI® Stands at 50.8%

Business Activity Index at 54.2%; New Orders Index at 51.3%; Employment Index at 47.2%; Supplier Deliveries Index at 50.3%

TEMPE, Ariz., July 3, 2025 /PRNewswire/ — Economic activity in the services sector grew in June after just one month of contraction, say the nation’s purchasing and supply executives in the latest Services ISM^® Report On Business^®. The Services PMI^® indicated expansion at 50.8 percent, above the 50-percent breakeven point for 11th time in the last 12 months.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management^® (ISM^®) Services Business Survey Committee: “In June, the Services PMI^® registered 50.8 percent, 0.9 percentage point higher than the May figure of 49.9 percent. The Business Activity Index returned to expansion territory in June, registering 54.2 percent, 4.2 percentage points higher than the ‘unchanged’ reading of 50 percent recorded in May. This index has not been in contraction territory since May 2020. The New Orders Index returned to expansion territory in June, recording a reading of 51.3 percent, an increase of 4.9 percentage points from the May figure of 46.4 percent. The Employment Index returned to contraction territory for the third time in the last four months; the reading of 47.2 percent is 3.5 percentage points lower than the 50.7 percent recorded in May.

“The Supplier Deliveries Index registered 50.3 percent, 2.2 percentage points lower than the 52.5 percent recorded in May. This is the seventh consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance. (Supplier Deliveries is the only ISM^® Report On Business^® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

“The Prices Index registered 67.5 percent in June, a 1.2-percentage point decrease from May’s reading of 68.7 percent. The index has exceeded 60 percent for seven straight months, with the May and June readings the highest since November 2022 (69.4 percent).

“The Inventories Index landed in expansion territory in June for the fourth time in 2025, registering 52.7 percent, an increase of 3 percentage points from May’s figure of 49.7 percent. The Inventory Sentiment Index expanded for the 26th consecutive month, registering 57.1 percent, down 5.8 percentage points from May’s figure of 62.9 percent. The Backlog of Orders Index continued its decline, registering 42.4 percent in June, a 1-percentage point decrease from the May figure of 43.4 percent, contracting for the 10th time in the last 11 months and posting its lowest reading since August 2023 (41.8 percent).

“Ten industries reported growth in June, the same number as reported in May. The Services PMI^® has expanded in 57 of the last 61 months dating back to June 2020. The June reading of 50.8 percent is 1.6 percentage points below the 12-month average reading of 52.4 percent.”

Miller continues, “June’s PMI^® level is a welcome return to expansion, although slow growth and economic uncertainty were frequently referenced by respondents. This month’s reading is equal to the average reading of 50.8 percent over the prior three months, indicating both stability and slight expansion in that time period. Both the Business Activity and New Orders indexes returned to expansion territory, although the Backlog of Orders Index contracted at a faster rate compared to May. Price increases impacting costs of operations were mentioned more frequently this month. Middle East tensions were a new subject of comments in June, but there was no indication of related supply chain disruptions. The most common topic among survey panelists continued to be concerns about impacts related to tariffs.”

INDUSTRY PERFORMANCE
The 10 services industries reporting growth in June — listed in order — are: Other Services; Transportation & Warehousing; Utilities; Arts, Entertainment & Recreation; Management of Companies & Support Services; Wholesale Trade; Public Administration; Retail Trade; Information; and Real Estate, Rental & Leasing. The six industries reporting a contraction in the month of June — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Construction; Mining; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Educational Services.

WHAT RESPONDENTS ARE SAYING

• “Restaurant sales and traffic remain flat to prior year. Staffing is adequate for our current needs, and no supply chain concerns this month.” [Accommodation & Food Services]
• “Increased cost from tariffs and the potential for tariffs is impacting cost increases. Higher cost of high-dollar items like 150-horsepower farm tractors are forcing farmers to delay purchasing or purchase used equipment. Tension in the Middle East is creating great concern and uncertainty.” [Agriculture, Forestry, Fishing & Hunting]
• “Sales remain stubbornly slow due to affordability issues with higher mortgage rates and high property values. Residential construction has embarked on cost-cutting measures through value engineering, supplier margin reductions and layoffs.” [Construction]
• “Prices have gone up from tariff recovery fees — separate line items — but the supply chain, deliveries and inventories have remained mostly stable after the initial disruption. Costs continue to increase across the board, so our goal is to mitigate that.” [Health Care & Social Assistance]
• “General uncertainty around the economy continues to drive increases in prices. Also, lots of SaaS (software-as-a-service) vendors are using the AI (artificial intelligence) boom to restructure pricing and products, resulting in massive increases.” [Information]
• “After several slow months, business is starting to increase. New requests are going out to suppliers.” [Other Services]
• “Confidence in a predictable economic environment has eroded to a point where capital investments are being severely curtailed.” [Professional, Scientific & Technical Services]
• “Business growth is slow. Global economic conditions impacted by U.S. tariffs are creating significant uncertainty, which is holding businesses back from making short- to medium-term business decisions.” [Real Estate, Rental & Leasing]
• “Lead times are extending in the past month or two. Seeing high-single- or low-double-digit percent increases in pricing on metals related to commodity hardware and products.” [Utilities]
• “Business seems to be picking up. Many of the macroeconomic factors that were concerning look to be playing out in our favor. High interest rates are still a problem. Supplies are ample for current business levels.” [Wholesale Trade]

Services ISM^® Report On Business^® data is seasonally adjusted for the Business Activity, New Orders, Employment and Prices indexes. Manufacturing ISM^® Report On Business^® data is seasonally adjusted for New Orders, Production, Employment and Inventories indexes.
*Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE, AND IN SHORT SUPPLY

Commodities Up in Price
Aluminum (2); Aluminum Products; Construction Contractors; Copper Based Products; Labor (55); Labor — Services; Laboratory Supplies; Software — Licensing; Steel; Steel Products (6); and Transformers.

Commodities Down in Price
Diesel Fuel (4); Gasoline (4); and Lumber (2).

Commodities in Short Supply
Clamps — Medical; Construction Contractors; and Syringes.

Note: The number of consecutive months the commodity is listed is indicated after each item.

JUNE 2025 SERVICES INDEX SUMMARIES

Services PMI^®
In June, the Services PMI^® registered 50.8 percent, a 0.9-percentage point increase compared to the May reading of 49.9 percent. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates it is generally contracting.

A Services PMI^® above 48.6 percent, over time, generally indicates an expansion of the overall economy. Therefore, the June Services PMI^® indicates the overall economy is expanding for the 61st straight month. Miller says, “The past relationship between the Services PMI^® and the overall economy indicates that the Services PMI^® for June (50.8 percent) corresponds to a 0.7-percentage point increase in real gross domestic product (GDP) on an annualized basis.”

SERVICES PMI^® HISTORY

Business Activity
ISM^®‘s Business Activity Index returned to expansion territory with a reading of 54.2 percent in June, 4.2 percentage points higher than the “unchanged” reading of 50 percent recorded in May. Prior to the May reading, the Business Activity Index had been in expansion territory for 59 consecutive months since its coronavirus pandemic lows. Comments from respondents include: “Well drilling and completion operations are at full scale, and work on a new facility is in full swing” and “Mother’s Day and Memorial Day related higher sales.”

The 11 industries reporting an increase in business activity for the month of June (one fewer than in May) — listed in order — are: Other Services; Arts, Entertainment & Recreation; Public Administration; Information; Utilities; Educational Services; Wholesale Trade; Retail Trade; Management of Companies & Support Services; Transportation & Warehousing; and Finance & Insurance. The three industries reporting a decrease in business activity for the month of June are: Agriculture, Forestry, Fishing & Hunting; Construction; and Professional, Scientific & Technical Services.

New Orders
ISM^®‘s New Orders Index registered 51.3 percent in June, 4.9 percentage points higher than the reading of 46.4 percent in May. The index has been in expansion territory in 11 of the last 12 months. Comments from respondents include: “Companies interested in expanding operations in U.S. and minimizing supply disruptions” and “Higher product cost; weakened demand because many buyers loaded inventory ahead of tariff deadlines.”

The eight industries reporting an increase in new orders for the month of June — listed in order — are: Other Services; Finance & Insurance; Professional, Scientific & Technical Services; Transportation & Warehousing; Wholesale Trade; Utilities; Public Administration; and Educational Services. The four industries reporting a decrease in new orders for the month of June are: Agriculture, Forestry, Fishing & Hunting; Mining; Real Estate, Rental & Leasing; and Construction. Six industries reported no change in June.

Employment
Employment activity in the services sector returned to contraction in June after one month of expansion. The Employment Index registered 47.2 percent, down 3.5 percentage points from the May figure of 50.7 percent. Comments from respondents include: “Not hiring new staff if we can backfill the role with current employees” and “The administration’s proposed budget for fiscal year 2026 has put a pause on many pending hiring actions.”

The five industries reporting an increase in employment in June are: Real Estate, Rental & Leasing; Utilities; Transportation & Warehousing; Wholesale Trade; and Information. The nine industries reporting a decrease in employment in June — listed in order — are: Other Services; Educational Services; Mining; Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Construction; Health Care & Social Assistance; Retail Trade; and Professional, Scientific & Technical Services.

Supplier Deliveries
In June, the Supplier Deliveries Index indicated slower supplier performance for the seventh month in a row. The index registered 50.3 percent, down 2.2 percentage points from the 52.5 percent recorded in May. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: “Tariff charges are being added after POs are already issued, which is slowing delivery” and “Increased demand for electrical equipment.”

The six industries reporting slower deliveries in June — in the following order — are: Management of Companies & Support Services; Other Services; Transportation & Warehousing; Educational Services; Retail Trade; and Wholesale Trade. The five industries reporting faster supplier deliveries for the month of June are: Agriculture, Forestry, Fishing & Hunting; Construction; Information; Professional, Scientific & Technical Services; and Public Administration. Seven industries reported no change in Supplier Deliveries in June.

Inventories
The Inventories Index registered in expansion territory for the fourth time in 2025. The reading of 52.7 percent is a 3-percentage point increase compared to the 49.7 percent reported in May. Of the total respondents in June, 43 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Since the tariffs haven’t negatively affected us yet, we bought a little extra inventory to cover us just in case the talks with China don’t go well” and “There has been a need to increase stock purchases to both get ahead of further price increases, and factoring in longer lead times.”

The eight industries reporting an increase in inventories in June — in the following order — are: Mining; Wholesale Trade; Other Services; Professional, Scientific & Technical Services; Retail Trade; Management of Companies & Support Services; Information; and Health Care & Social Assistance. The five industries reporting a decrease in inventories in June are: Finance & Insurance; Agriculture, Forestry, Fishing & Hunting; Educational Services; Construction; and Utilities.

Prices
Prices paid by services organizations for materials and services increased in June for the 97th consecutive month. The Prices Index registered 67.5 percent, 1.2 percentage points lower than the 68.7 percent recorded in May. The June reading is the index’s second highest since November 2022 (69.4 percent), as well as its seventh straight month above 60 percent and the 32nd in a row below 70 percent.

Fourteen of the 18 services industries reported an increase in prices paid during the month of June, in the following order: Construction; Retail Trade; Wholesale Trade; Information; Transportation & Warehousing; Other Services; Real Estate, Rental & Leasing; Educational Services; Utilities; Health Care & Social Assistance; Management of Companies & Support Services; Finance & Insurance; Professional, Scientific & Technical Services; and Public Administration. No industries reported a decrease in prices paid in June.

NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report.

Backlog of Orders
The ISM^® Services Backlog of Orders Index contracted in June for the fourth consecutive month. The reading of 42.4 percent is 1 percentage point lower than the 43.4 percent reported in May. Of the total respondents in June, 41 percent indicated they do not measure backlog of orders. Respondent comments include: “Lower sales have slowed the pace of backlog orders” and “Slowed funding decreased new requests and allowed us to catch up on outstanding volume.”

The four industries reporting an increase in order backlogs in June are: Transportation & Warehousing; Utilities; Wholesale Trade; and Public Administration. The 10 industries reporting a decrease in order backlogs in June — in the following order — are: Mining; Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Construction; Information; Retail Trade; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; and Finance & Insurance.

New Export Orders
Orders and requests for services and other non-manufacturing activities to be provided outside of the U.S. by domestically based companies expanded for the first time in four months in June. The New Export Orders Index registered 51.1 percent, up 2.6 percentage points compared to the May reading of 48.5 percent. Of the total respondents in June, 71 percent indicated they do not perform, or do not separately measure, orders for work outside of the U.S. Respondent comments include: “Increased demand for subscriptions” and “Partnerships are localized and increasing at an unusually rapid pace in the United Kingdom and Germany.”

The four industries reporting an increase in new export orders in June are: Information; Retail Trade; Utilities; and Transportation & Warehousing. The five industries reporting a decrease in new export orders in June are: Construction; Mining; Educational Services; Finance & Insurance; and Professional, Scientific & Technical Services. Nine industries reported no change in exports.

Imports
The Imports Index expanded for the first time in the last three months, registering 51.7 percent, 3.5 percentage points higher than the 48.2 percent reported in May and only 0.9 percentage point below March’s reading of 52.6 percent, when pre-tariff ordering was underway. The index has indicated expansion in 25 of the last 34 months. Seventy-seven percent of respondents reported that they do not use, or do not track the use of, imported materials. Respondent comments include: “Buildup of materials for new product build” and “Took delivery on an assigned contract of a product we would not have otherwise imported.”

The five industries reporting an increase in imports for the month of June are: Real Estate, Rental & Leasing; Retail Trade; Utilities; Wholesale Trade; and Management of Companies & Support Services. The six industries reporting a decrease in imports in June — in the following order — are: Mining; Finance & Insurance; Educational Services; Professional, Scientific & Technical Services; Transportation & Warehousing; and Information. Seven industries reported no change in imports in June.

Inventory Sentiment
The ISM^® Services Inventory Sentiment Index indicated that inventories of raw materials were “too high” for the 26th consecutive month in June. The index registered 57.1 percent, a decrease of 5.8 percentage points from May’s figure of 62.9 percent. This reading indicates that respondents feel their companies’ inventory levels are too high when correlated to business requirements.

The 10 industries reporting sentiment that their inventories were too high in June — listed in order — are: Construction; Other Services; Retail Trade; Wholesale Trade; Mining; Information; Utilities; Public Administration; Health Care & Social Assistance; and Professional, Scientific & Technical Services. There were no industries reporting feeling that their inventory is too low, and eight industries reported no change in imports in June.

About This Report
DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report’s information reflects the entire U.S., while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of June 2025.

The data presented herein is obtained from a survey of supply executives in the services sector based on information they have collected within their respective organizations. ISM^® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation
The Services ISM^® Report On Business^® (formerly the Non-Manufacturing ISM^® Report On Business^®) is based on data compiled from purchasing and supply executives nationwide. Membership of the Services Business Survey Panel (formerly Non-Manufacturing Business Survey Committee) is diversified by NAICS, based on each industry’s contribution to gross domestic product (GDP). The Services Business Survey Panel responses are divided into the following NAICS code categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation & Warehousing; Information; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Public Administration; and Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services). The data are weighted based on each industry’s contribution to GDP. According to BEA estimates (the average of the fourth quarter 2023 GDP estimate and the GDP estimates for first, second, and third quarter 2024, as released on December 19, 2024), the six largest services sectors are: Real Estate, Rental & Leasing; Public Administration; Professional, Scientific, & Technical Services; Health Care & Social Assistance; Information; and Finance & Insurance.

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment and Supplier Deliveries), this report shows the percentage reporting each response and the diffusion index. Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The remaining indexes have not indicated significant seasonality.

The Services PMI^® is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50 percent indicates that the services economy is generally expanding; below 50 percent indicates that it is generally declining. Supplier Deliveries is an exception. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.

A Services PMI^® above 48.6 percent, over time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 48.6 percent, it is generally declining. The distance from 50 percent or 48.6 percent is indicative of the strength of the expansion or decline.

The Services ISM^® Report On Business^® survey is sent out to Services Business Survey Panel respondents in the first part of each month. Respondents are asked to ONLY report on U.S. operations for the current month. ISM^® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses to give the most accurate picture of current business activity. ISM^® then compiles the report for release on the third business day of the following month.

The industries reporting growth, as indicated in the Services ISM^® Report On Business^® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

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About Institute for Supply Management^®
Institute for Supply Management^® (ISM^®) is the first and leading not-for-profit professional supply management organization worldwide. Its community of more than 50,000 in more than 100 countries around the world manage about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 by practitioners, ISM is committed to advancing the strategy and practice of integrated, end-to-end supply chain management through leading edge data-driven resources, community, and education to empower individuals, create organizational value and to drive competitive advantage. ISM’s vision is to foster a prosperous, sustainable world. ISM empowers and leads the profession through the ISM^® Report On Business^®, its highly regarded certification and training programs, corporate services, events and assessments. The ISM^® Report On Business^®, Manufacturing, Services, and Hospital are three of the most reliable economic indicators available, providing guidance to supply management professionals, economists, analysts, and government and business leaders. For more information, please visit: www.ismworld.org.

The full text version of the Services ISM^® Report On Business^® is posted on ISM^®‘s website at www.ismrob.org on the third business day* of every month after 10:00 a.m. ET. The one exception is in January, the report is released on the fourth business day of the month.

The next Services ISM^® Report On Business^® featuring July 2025 data will be released at 10:00 a.m. ET on Tuesday, August 5, 2025.

*Unless the New York Stock Exchange is closed.

SOURCE Institute for Supply Management