Services sector cools in September, price pressures building

Activity in the U.S. services sector cooled in September, and a key measure of prices paid by businesses for inputs rose to the highest level in more than four years, suggesting inflation pressures could persist into 2027. The Institute for Supply Management survey, published Monday, found concerns about higher fuel prices dominated responses, alongside stress on supply chains. The US-Israeli conflict with Iran has raised energy-related prices and contributed to shortages for commodities shipped via the Strait of Hormuz, with diesel hitting record highs affecting farmers and truckers. The ISM nonmanufacturing Purchasing Managers’ Index slipped to 54.9 from 55.4 in August, still signaling growth above 50. Economists also point to tariffs and fuel costs as cited drivers.