US Services Index Rises to 54.1 in July as ADP Private Payrolls Add 44,000
Two readings on the United States economy released on 5 August 2026 pointed the same way: activity in the services sector accelerated while hiring did not. The Institute for Supply Management reported that its Services PMI rose to 54.1 percent in July from 54.0 percent in June, and ADP Research reported that private employers added 44,000 jobs over the month.
The composite index moved barely at all, but its components moved a great deal. Business activity jumped 3.7 points and new orders 2.1 points, while the employment index fell 3.8 points into contraction.
| ISM Services index (percent) | July 2026 | June 2026 | Change |
|---|---|---|---|
| Services PMI | 54.1 | 54.0 | +0.1 |
| Business Activity | 59.1 | 55.4 | +3.7 |
| New Orders | 57.2 | 55.1 | +2.1 |
| Employment | 47.4 | 51.2 | -3.8 |
| Prices | 70.3 | 67.7 | +2.6 |
| Supplier Deliveries | 52.8 | 54.4 | -1.6 |
| Inventories | 51.4 | 51.2 | +0.2 |
| Backlog of Orders | 50.9 | 54.9 | -4.0 |
| New Export Orders | 52.0 | 50.4 | +1.6 |
| Imports | 51.8 | 49.4 | +2.4 |
| Inventory Sentiment | 52.5 | 52.6 | -0.1 |
July marked the twenty-fifth consecutive month of expansion in the services sector, and the seventy-fourth straight month of overall economic expansion on ISM’s measure. Thirteen industries reported growth, one fewer than in June, and four reported contraction, the same number as in June.
Cost pressure remains the standout. The prices index at 70.3 percent was the fourth reading above 70 in five months, following 70.7 in March, 70.7 in April, 71.3 in May and 67.7 in June. Steve Miller, CPSM, CSCP, Chair of the ISM Services Business Survey Committee, noted that “the Prices Index broke the 70-percent threshold for the fourth time in five months.”
ADP’s July count of 44,000 private jobs came alongside a downward revision to June, to 95,000 from the 98,000 first reported. Growth was narrow: goods-producing employment fell by 3,000 while services added 47,000, and within services a single category, education and health, accounted for most of the overall increase, adding 36,000 of the 44,000 net jobs created.
| ADP private employment, July 2026 | Change in jobs |
|---|---|
| Goods-producing | -3,000 |
| Mining and natural resources | -6,000 |
| Construction | +1,000 |
| Manufacturing | +2,000 |
| Service-providing | +47,000 |
| Trade, transportation and utilities | -8,000 |
| Information | +5,000 |
| Financial activities | +10,000 |
| Professional and business services | +9,000 |
| Education and health services | +36,000 |
| Leisure and hospitality | -11,000 |
| Other services | +6,000 |
| Total | +44,000 |
By employer size, small businesses added 23,000 jobs, with firms of one to nineteen employees adding 27,000 and firms of twenty to forty-nine shedding 4,000. Medium-sized establishments added 8,000, split between 2,000 at firms of fifty to 249 employees and 6,000 at firms of 250 to 499. Large employers added 13,000.
Pay growth was steady. Annual pay for employees who stayed in their jobs rose 4.4 percent, while pay for job-changers rose 7.0 percent. Dr. Nela Richardson, Chief Economist at ADP, said that “job-changers are highly sensitive to real-time economic conditions, and their rapid pay growth implies supply constraints in parts of the labor market.”
Why it matters: The two reports describe an economy in which stronger activity was not accompanied by broader payroll expansion. On our reading, the combination of a business activity index of 59.1 and a services employment index below 48 is unusual and points to output being met from existing staff rather than new hiring. The gap of 2.6 percentage points between job-changer and job-stayer pay growth carries the same message from the wage side. For Gulf investors and exporters, the practical read is that United States services demand remains firm while the cost side stays sticky, which keeps the near-term policy path uncertain rather than clearly easing.
Looking ahead: The official monthly employment report from the Bureau of Labor Statistics is the next test of whether ADP’s soft private-payroll signal is confirmed in the establishment survey. A prices index that has now spent four of five months above 70 will weigh on how quickly services disinflation is judged to be progressing.
Sources: Institute for Supply Management, Services PMI at 54.1 percent, July 2026 Services ISM Report On Business, 5 August 2026; ADP Research, Private Sector Employment Increased by 44,000 Jobs in July; Annual Pay was Up 4.4 percent, 5 August 2026.
