--- source: Institute for Supply Management url: https://www.ismworld.org/supply-management-news-and-reports/reports/ism-pmi-reports/services/february/ document_type: html date_retrieved: 2026-03-15 period: February 2026 parent_publication: ISM® Services PMI® Report (Non-Manufacturing) indicators_covered: - Non Manufacturing PMI - ISM Non Manufacturing Business Activity - ISM Non Manufacturing New Orders - ISM Non Manufacturing Employment - ISM Non Manufacturing Prices release_date: 2026-03-04 --- # February 2026 ISM® Services PMI® Report ## Executive Summary **Services PMI® at 56.1%** Economic activity in the **services sector continued to expand in February**, according to purchasing and supply executives surveyed by the Institute for Supply Management®. The Services PMI® registered 56.1 percent, its 20th consecutive month in expansion territory (above 50 percent). ### Key Indicators at a Glance - **Services PMI®**: 56.1% (previous: 53.8%, +2.3 points) - **Business Activity Index**: 59.9% (previous: 57.4%, +2.5 points) - **New Orders Index**: 58.6% (previous: 53.1%, +5.5 points) - **Employment Index**: 51.8% (previous: 50.3%, +1.5 points) - **Supplier Deliveries Index**: 53.9% (previous: 54.2%, -0.3 points) - **Prices Index**: 63.0% (previous: 66.6%, -3.6 points) --- ## Report Statement The report was issued by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® Services Business Survey Committee: "In February, the Services PMI® registered a reading of 56.1 percent, an increase of 2.3 percentage points over January's figure of 53.8 percent and the highest since July 2022 (56.5 percent). The Business Activity Index accelerated its expansion in February, registering 59.9 percent, 2.5 percentage points higher than its reading of 57.4 percent recorded in January. The New Orders Index also accelerated its expansion in February, with a reading of 58.6 percent, 5.5 percentage points above January's figure of 53.1 percent. The Employment Index expanded for the third month in a row with a reading of 51.8 percent, a 1.5-percentage point increase from the 50.3 percent recorded in January. "The Supplier Deliveries Index registered 53.9 percent, 0.3 percentage point lower than the 54.2 percent recorded in January. This is the 15th consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance. (Supplier Deliveries is the only ISM® PMI® Reports 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 63 percent in February, dropping to 3.4 percentage points below its 12-month average of 66.4 percent. The February figure was a 3.6-percentage point decrease from January's reading of 66.6 percent. The index has exceeded 60 percent for 15 straight months, but February's reading is its lowest since March 2025 (61.4 percent). "The Inventories Index registered 56.4 percent in February, an increase of 11.3 percentage points from January's figure of 45.1 percent. The Inventory Sentiment Index expanded for the 34th consecutive month, registering 55.3 percent, up 1 percentage point from January's figure of 54.3 percent. The Backlog of Orders Index was in expansion territory for the first time since February 2025, registering 55.9 percent in February, an 11.9-percentage point increase from the January figure of 44 percent. The New Export Orders and Imports indexes also returned to expansion territory. The New Export Orders Index increased to 57.2 percent, a 12.2-percentage point increase over its February reading of 45 percent, and the Imports Index returned to expansion territory at 51.8 percent, an increase of 3.6 percentage points over January's reading of 48.2 percent. "Fourteen industries reported growth in February, three more than in January, and the number reporting contraction shrank to three. The February Services PMI® reading of 56.1 percent is 4.1 percentage points above the 12-month average of 52 percent. This average is an uptick of 0.2 percentage point over January's 12-month average of 51.8 percent." Miller continues, "February's Services PMI® features the third month in a row with all four subindexes being in expansion territory, similar to a period from December 2024 through February 2025. Also, all 10 reported indexes were in expansion territory for the first time since March 2021. Further, eight of these indexes are on positive trends, with increases of as much as 11 percentage points over the last six months. The two indexes with negative trends over this time period are Prices, which has declined 6 percentage points, and Inventory Sentiment, which is down 0.4 percentage point. Although the Prices Index is still in expansion territory and in its longest streak above 60 percent since March 2023, February's reading is its lowest in 11 months. "The services sector is heating up, with the Business Activity, New Orders, and New Export Orders indexes at their highest levels since 2024, and the Backlog of Orders Index with its best reading since July 2022 (58.3 percent). The Supplier Deliveries Index is higher (and indicates slower deliveries) than its 12-month average, but the index has eased slightly since the previous month. Gasoline was noted by some respondents as a commodity up in price for the first time since February 2025, and copper was up in price for the third month in a row. Commentary on trade uncertainty increased, with respondents commenting that tariffs impacts have stabilized and are now embedded in supply chain costs. Although there were several comments on tariff uncertainty regarding the U.S. Supreme Court decision, there was no alarm regarding supply chain performance, suggesting that services companies have developed capabilities to routinely address shifts in tariff policies." --- ## Industry Performance **Industries Reporting Growth (14 total, +3 from January):** Mining; Information; Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Wholesale Trade; Finance & Insurance; Utilities; Professional, Scientific & Technical Services; Construction; Management of Companies & Support Services; Public Administration; Health Care & Social Assistance; and Educational Services. **Industries Reporting Contraction (3 total, -2 from January):** Retail Trade; Arts, Entertainment & Recreation; and Transportation & Warehousing. --- ## Respondent Commentary ### Selected Business Insights **Accommodation & Food Services:** "India tariffs are anticipated to provide some measure of cost relief once current inventory levels are worked through. At a high level, we are addressing price/value perception which continues to drive negative sales impact." **Agriculture, Forestry, Fishing & Hunting:** "Our industry seems to have adapted to the tariffs. The costs are embedded into the import cost the company has to shoulder." **Construction:** "Residential homebuilding continues to lag due to affordability and interest rate issues. While we saw improved sales last month due to further discounts, we struggled to achieve similar results in February. More material cost increases have rolled in for beginning of the second quarter, so margins continue to be reduced." **Educational Services:** "Higher education institutions are operating cautiously due to enrollment fluctuations and uncertainty in state and federal funding and name, image and likeness licensing. While supply chains have improved, costs remain high for technology, facilities, utilities, and contracted services. Labor expenses are also increasing due to competitive hiring. As a result, purchasing decisions are focused on essential needs, cost control, and maintaining key operations, with some noncritical projects being delayed." **Information Technology:** "Tariff volatility and shifting bilateral trade agreements are materially impacting our purchasing operations. Changes in U.S. semiconductor supply constraints continue to pressure component pricing and availability. The combination of tariff exposure and semiconductor market instability is increasing procurement risk, compressing margins, and requiring more aggressive supplier diversification and contractual protections to maintain cost competitiveness." **Real Estate, Rental & Leasing:** "The business climate remains solid overall, but significant unknown risks from further potential tariff actions by the U.S. government are dampening business investment." **Retail Trade:** "Due to random-access memory shortages, we are seeing increased cost and lead times from key technology providers. Quotes that were normally secure for 90 days are now 30 days or less." **Transportation & Warehousing:** "Transportation/truck capacity has been extremely tight, causing rates to spike 30 percent to 40 percent. Some of this can be attributed to the weather; some can be attributed to the Federal Highway Administration's push to make sure all drivers are proficient in English and others can be attributed to an increase in commerce." **Utilities:** "Mid-first quarter business conditions are good. The unseasonable cold weather has helped to increase demand and boost revenues. All else is on track so far." **Wholesale Trade:** "Overall, our business performance in January and February has been solid (minus some winter storm hurdles). Our upstream oil and gas business has stalled for two years and is not supporting our growth. On the other hand, all data center-related activity continues to grow substantially. Downstream is always steady, but we are taking more market share within it. The business here is busy. All industries are doing well, minus the oil field business." --- ## Commodities Analysis ### Commodities Reported Up in Price Gasoline; Copper; and Steel ### Commodities Reported Down in Price Diesel Fuel; and Lumber ### Commodities in Short Supply Random Access Memory (RAM); Semiconductors; and Truck Transportation Capacity --- ## Index Summaries ### Services PMI® Details The Services PMI® is calculated from the five diffusion indexes listed below. Reading above 50 percent indicates expansion in economic activity; below 50 indicates contraction. **Current Status:** - **February Reading**: 56.1% - **Previous Month (January)**: 53.8% - **12-Month Average**: 52.4% - **Trend**: Expansion (20 consecutive months above 50%) ### Business Activity/Production The Business Activity Index reflects the volume of business or service activity at the responding firms. A reading above 50 percent indicates expansion; below 50 percent indicates contraction. **Current Status:** - **February Reading**: 59.9% - **Previous Month (January)**: 57.4% - **Change**: +2.5 percentage points ### New Orders The New Orders Index reflects the volume of new orders received by responding firms. A reading above 50 percent indicates expansion; below 50 percent indicates contraction. **Current Status:** - **February Reading**: 58.6% - **Previous Month (January)**: 53.1% - **Change**: +5.5 percentage points ### Employment The Employment Index reflects whether employment is expanding or contracting for responding firms. A reading above 50 percent indicates expansion; below 50 percent indicates contraction. **Current Status:** - **February Reading**: 51.8% - **Previous Month (January)**: 50.3% - **Change**: +1.5 percentage points - **Trend**: Third consecutive month in expansion territory ### Supplier Deliveries The Supplier Deliveries Index reflects whether deliveries from suppliers are becoming faster or slower. A reading above 50 percent indicates slower deliveries, which is typical in an expanding economy (THIS INDEX IS INVERSE). **Current Status:** - **February Reading**: 53.9% - **Previous Month (January)**: 54.2% - **Change**: -0.3 percentage points - **Status**: 15th consecutive month in expansion territory ### Inventories The Inventories Index reflects whether inventories are expanding or contracting at responding firms. **Current Status:** - **February Reading**: 56.4% - **Previous Month (January)**: 45.1% - **Change**: +11.3 percentage points ### Prices The Prices Index reflects the direction of price changes reported by responding firms. A reading above 50 percent indicates that prices are rising; below 50 percent indicates that prices are falling. **Current Status:** - **February Reading**: 63.0% - **Previous Month (January)**: 66.6% - **Change**: -3.6 percentage points - **12-Month Average**: 66.4% - **Status**: 15th consecutive month above 60% (longest streak since March 2023); lowest reading in 11 months --- ## Services vs. Manufacturing Comparison The February report highlights the divergence between services and manufacturing PMI readings: - **Services PMI**: 56.1% (expansion) - **Manufacturing PMI**: (reported separately in concurrent Manufacturing Report) Services sector is showing robust expansion with broad-based strength across Business Activity, New Orders, and Backlog of Orders indexes at multi-year highs. --- ## Methodology The Non-Manufacturing ISM® Report On Business® is based on data compiled from purchasing and supply executives nationwide. 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), the report shows: - The percentage reporting each response - The diffusion index **Index Interpretation:** - An index reading **above 50 percent** indicates that the non-manufacturing economy in that index is generally **expanding** - An index reading **below 50 percent** indicates that it is generally **declining** **Sector Context:** Orders to the service producers make up about **90 percent of the US economy**. --- ## Historical Perspective - **February 2026 Services PMI (56.1%)** is the highest reading since July 2022 (56.5%) - **Expansion streak**: 20th consecutive month above 50% - **All 10 indexes in expansion**: First time since March 2021 - **8 of 10 indexes trending positive** with increases of up to 11 percentage points over the last six months --- ## Key Themes 1. **Services Sector Accelerating**: Business Activity and New Orders both accelerated with significant month-over-month gains, suggesting strong demand momentum. 2. **Labor Market Resilience**: Employment expanded for the third consecutive month, indicating sustained hiring despite broader economic uncertainties. 3. **Supply Chain Normalization**: Supplier Deliveries remain elevated but eased slightly; respondents indicate embedded tariff costs and adaptation strategies are working. 4. **Pricing Pressure Moderating**: Prices Index fell 3.6 points from January but remains at elevated levels, suggesting some relief from prior peaks while cost pressures persist. 5. **Trade Sentiment Stabilizing**: While tariff commentary continues, respondents report costs are "embedded" and supply chain disruption risk has declined materially. 6. **Inventory Rebuild**: Significant month-over-month increase in Inventories Index (+11.3 points), suggesting firms are rebuilding stock ahead of strong demand. 7. **Broad Industry Participation**: 14 of 17 industry groupings reported growth; only 3 in contraction. This breadth supports the strength of the expansion narrative. --- ## Source **Institute for Supply Management®** 309 W Elliot Road, Suite 113 Tempe, Arizona 85284 Phone: +1 480-752-6276 The ISM® PMI® Reports are released monthly by the Institute for Supply Management®. The Services report covers the Non-Manufacturing sectors of the US economy and is a key economic indicator tracked by central banks, investors, and policymakers worldwide. --- *Report released: March 4, 2026 (for February 2026 activity)* *Data collection and methodology: ISM® Business Survey Committee* *Classification: Public statistical release*