The US services sector saw economic activity surge to another record high in July, the Institute for Supply Management reported today. In addition, services employment returned to growth despite the constrained labor pool.
The report’s “Service PMI” increased to a reading of 64.1% in July from 60.1% in June. Readings above 50% indicate growth, with higher numbers indicating quicker growth; June’s reading marked the 14th consecutive month of growth in the measure of services sector business activity, which has expanded for all but two of the last 138 months.
“The rate of expansion in the services sector recorded another all-time high,” said Anthony Nieves, chair of the Institute for Supply Management Services Business Survey Committee. “The Employment Index reflected growth, even though the constrained labor pool continues to be an issue. Materials shortages, inflation and logistics continue to negatively impact the continuity of supply.”
Reuters reported July’s reading exceeded the forecast in its poll of economists, which predicted the index climbing to 60.5%.
The ISM’s report found that employment activity in the services sector returned to growth in July after contracting in June.
The services employment index rose to a reading of 53.8% in July from 49.3% in June. The employment index is one of four diffusion indexes that comprise the composite Services PMI. The other diffusion indexes are new orders, production and inventories.
“The employment index reflected growth, even though the constrained labor pool continues to be an issue,” said Nieves. “Materials shortages, inflation and logistics continue to negatively impact the continuity of supply.”.
The report is based on a survey of purchasing and supply executives nationwide. Comments from respondents include: “Trying to aggressively fill positions. (However, it is) very difficult to get positions filled. (We are) still using agency clinical staffing. Looks like people don’t want to work in the lower support service areas.” Also: “Demand is up, and it is hard to find employees.”