Jobs data at odds with jobs data
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The pace of hiring activity in services industries declined in June, according to the Institute for Supply Management.
Why it matters: Labor supply constraints continue to limit the U.S. economy’s ability to grow.
- This was a reason the ISM services index fell to 60.1 in June from 64 in May, a sign that growth in the services sector is decelerating.
- The ISM services index is a measure of activity in nonmanufacturing businesses. Services account for 103.5 million jobs, or 71%, of the U.S. payrolls.
By the numbers: The ISM’s services employment index — a subset of the overall index — fell to 49.3 in June from 55.3 in May, which means the amount of hiring went down.
What they’re saying: "Businesses haven’t been able to staff according to the demand levels," Anthony Nieves, chair of the ISM’s Services Business Survey Committee, told Axios.
- "The labor markets are not there for some of these different services industries."
Yes, but: "That is at odds with the apparent message from the latest payroll figures, which suggested that employment growth is accelerating," Capital Economics’ Michael Pearce observed.
- Indeed, according to the June U.S. payrolls report, the services sector added 642,000 jobs in June, up from 497,000 added in May.
The bottom line: Expect mixed signals occasionally in short-term data, due to all sorts of data quality issues that have emerged during the pandemic.
- But even amid this noise, the bigger themes seem to prevail.
- "The comments accompanying the survey make clear that labor shortages and supply shortages are still squeezing output," Pearce wrote.
