The Institute for Supply Management’s September services report put the Services PMI at 54.9, down half a point from August, with the New Orders Index at a hot 59.8. Thirteen industries told ISM their orders rose. One said they fell. That one was construction.
ISM released the report on Oct. 5. Construction landed on the short list of four industries in overall contraction, third behind agriculture and mining and ahead of management of companies. It also reported lower business activity, lower employment and a shrinking backlog, while paying more for inputs and waiting longer for deliveries. That’s about the worst hand a purchasing survey can deal.
Where construction sat in the September ISM Services PMI
ISM ranks industries within each list by how strongly they moved. Reading down the September lists:
- New orders: construction was the only industry reporting a decrease, against 13 reporting increases.
- Business activity: one of three industries reporting a decline.
- Employment: one of eight reporting cuts, even as the national Employment Index crossed back above 50, to 50.1.
- Backlog of orders: one of four reporting a drop, while the national index rose to 56.6.
- Supplier deliveries: third of 11 industries reporting slower deliveries.
- Prices: all 17 industries reported paying more. The Prices Index reached 74.0.
The one construction comment ISM published came from the housing side: “Half of buyers walking through the door cannot qualify to purchase.” The respondent blamed interest rates.
Switchgear, wire and steel products on the short-supply list
The commodity lists read like an electrical subcontractor’s bad week. Switchgear appeared both as up in price and in short supply. Wire and cable has been short for four months. So have steel products, which have also risen in price for six straight months. Copper has climbed for 10.
“Contractors, construction” showed up as a line item that cost buyers more. That’s the rest of the services economy saying construction services got pricier in the same month construction firms said demand fell.
Both can be true. Electrical and mechanical trades tied to data center and power work are not the homebuilder quoted above, and ISM’s construction bucket holds all of them.
What the services PMI doesn’t tell contractors
Quite a lot. ISM publishes no index value for any single industry, so there’s no number for how far construction orders fell, only a position on a list. The release doesn’t say how many construction firms answered, or how the panel splits between residential, commercial and civil work. One published comment is one comment. And these are diffusion indexes: they count how many buyers reported higher versus lower, not dollar volume.
So treat it as a direction, not a magnitude.
The direction does line up with harder data. Census counted August construction spending below its year-ago level despite a monthly gain, and the September jobs report showed residential specialty trades shedding 7,900 positions.
A year ago, ISM’s September 2025 report also had construction third on its contraction list. Back then seven of 17 industries were shrinking and the headline index sat at 50.0. This September the rest of the services economy is running at 54.9 with a backlog index of 56.6, and construction is still on the wrong list. Being weak in a weak economy is one thing. Being the only industry with falling orders in a strong one is a different problem.
ISM reports October’s numbers in early November.