Aug 5, 2021 - Economy & Business

American services overcome constraints

ISM service index
Data: Institute of Supply Management; Chart: Axios Visuals

The U.S. services sector is growing at a record pace.

Why it matters: Labor shortages and supply chain issues have hindered business activity across sectors, but not so much that businesses aren’t able to grow at a high clip.

By the numbers: The ISM services PMI, an index that tracks activity in nonmanufacturing industries, jumped to a record high 64.1 in July from 60.1 in June.

  • All 17 services industries reported growth in July.
  • The employment index rose to 53.8 from 49.3 in the prior month, which suggests hiring conditions are improving.
  • However, the supplier deliveries index climbed to 72.0 from 68.5, meaning it’s taking longer on average for vendors to get supplies to their customers.
  • Also, the prices paid index increased to 82.3 from 79.5, which means inflation.

The big picture: "Rising case counts and the particularly virulent Delta variant are threatening to disrupt the recreation renaissance we have been counting on to drive a services spending boom this summer," Wells Fargo’s Sarah House wrote. "Through July at least, the service sector is still cranking at full throttle."

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