Prior month nonmanufacturing services PMI 55.4Details from a ISMServices PMI: 54.9. Prior 55.4.September components compared with August:Business activity: 56.5 vs 61.7New orders: 59.8 vs 60.9Employment: 50.1 vs 47.8Prices: 74.0 vs 72.6Supplier deliveries: 53.2 vs 51.3Backlog of orders: 56.6 vs 55.6Inventories: 57.8 vs 56.7New export orders: 46.9 vs 56.3Imports: 52.9 vs 56.3Inventory sentiment: 51.7 vs 54.1The US services sector continued to expand in September, although the pace eased. According to the Institute for Supply Management (ISM), the Services PMI slipped to 54.9 from 55.4, marking the 27th consecutive month of expansion. The details were mixed: business activity slowed, employment returned to slight expansion, and price pressures intensified.Business activity fell 5.2 points to 56.5, while new orders eased to 59.8, still indicating solid demand. Employment edged above the 50 dividing line to 50.1 after two months of contraction. Backlogs increased to 56.6, their highest reading since July 2022, suggesting businesses still have work to get through. Growth also broadened, with 13 industries expanding versus 12 in August.The inflation side remains a concern. The prices index increased to 74.0, its highest level since July 2022. Fuel costs were the most frequently cited issue affecting respondents, with tariffs and supply constraints also putting pressure on costs and delivery times. Supplier deliveries slowed further, while new export orders dropped sharply into contraction at 46.9.Quick analysis: Growth cooled, but the services sector continues to expand—and the inflation pressure is moving in the wrong direction. That combination could keep the Fed cautious about easing policy. Higher prices and improving employment could support US yields and the dollar, although the slowdown in activity and weaker export orders provide an offset. For stocks, continued demand is encouraging, but rising costs and higher yields could limit the benefit. The question going forward is whether businesses can work through rising backlogs without adding more price pressure.What this report measures: The ISM Services Purchasing Managers’ Index (PMI) is a monthly survey measuring changes in business conditions across service industries. Readings above 50 generally indicate expansion, while readings below 50 indicate contraction; these are index levels, not percentage growth rates. The supplier deliveries index works differently: above 50 indicates slower deliveries, which can reflect strong demand or supply disruptions.The broader US stock indices remain in positive territory:S&P index +0.25%NASDAQ index +0.55%NASDAQ 100 index +0.33%US yields are mixed, with shorter maturities lower and longer maturities higher in your snapshot:2-year: 4.8038%, down 2.12 basis points5-year: 5.0482%, down 0.68 basis point10-year: 5.2919%, up 1.49 basis points30-year: 5.6575%, up 2.75 basis pointsThe yield curve is steepening, with the 2-to-10-year spread widening by 3.61 basis points to 48.81 basis points. This article was written by Greg Michalowski at investinglive.com.