- U.S. service providers increased in July at the fastest pace in records dating back to 1997 as measures of business activity, new orders and employment all improved.
The Institute for Supply Management's services index jumped to 64.1 in June from 60.1 in June, topping all estimates in a Bloomberg survey of economists. The figures highlight the massive vaccine-fueled snapback in demand for services like dining out and travel in recent months. A gauge of business activity jumped almost 7 points to a near-record 67 and new orders growth accelerated.
At the same time, global demand is picking up. New export orders for U.S. service providers expanded at the fastest pace since 2007.
Still, Wednesday's report underscores how supply constraints are increasing the pandemic-driven growth in the dry sector and limiting prices higher. Order backlogs - which rose to a record in June - remain elevated and inventories contracted for a second straight month, indicating demand continues to outstrip supply.
'The current mining shortages, inflation and logistics continue to negatively impact the continuity of supply, said Anthony Nieves, chair of ISM's Services Business Survey Committee, in a statement.
Prices paid by service providers jumped to 82.3 last month, the highest level since September 2005. Meantime delivery times were extended, with a gauge of supplier deliveries rising to its second highest reading on record.
"Costs have risen dramatically in the last 45 days. Lodging, fuel, travel and supplies are all escalating sharply. Costs for available labor are also increasing as demand increases in a diminished labor pool. - Construction:
'Labor shortage continues for drivers and general labor work. We have increased compensation for many positions, but the shortage continues. - Management of Companies Support Services.
'Continued shortages of computer equipment are challenging for fulfillment needs. Corporate travel resumed, but we're seeing many flight cancellations and vehicle rental shortages. 'Ocean freight costs have caused a negative impact on our business. The congestions in Seattle and Long Beach have increased the lead time by 15 days. Additional delays occur in the Chicago rail yard, two to three weeks of additional lead time. There are hints that hiring obstacles will be lessening some. The employment index rose to 53.8 - indicator of growth - after contraction in the prior month.
The figures appear on Friday before the weekly employment report. Economists estimate 875,000 new jobs were added in July, marking the biggest gain since August of this year. A report earlier on Wednesday from the ADP Research Institute showed payrolls climbed 330,000 in July, the smallest gain in five months and missing all estimates.