Due to labor shortages, the growth rate of the US service industry in June was lower than expected.
Supply Management Association Service Index A decrease of 4 points, compared with 64 in May, its growth rate reached 60.1. A reading above 50 indicates expansion.
New orders, supply deliveries and commercial activity also declined.
Bloomberg Polls Monday showed that demand for services such as restaurant catering, hotel accommodation and travel remains high. The difficulty lies in the shortage of the supply chain-ISM’s measurement of the backlog of orders is the highest in service industry data since 1997.
The slowdown in growth in June partly reflected the difficulty for employers to find workers. ISM’s service industry employment index fell to its lowest level this year, falling to 49.3 from 55.3 in May. Other obstacles also exist in the contraction of the supply chain.
Anthony Nieves, chairman of the ISM Service Industry Survey Committee, said in a statement that this decline in growth is only a “slight correction” and that “the expansion rate of the service industry is still strong.”
He added: “Challenges such as material shortages, inflation, logistics and employment resources continue to be obstacles to the business environment.”
The service provider’s inventory is at the lowest level in history. ISM reports that inventory and supplier deliveries have shrunk by almost two percentage points.
Nieves told Bloomberg that due to the supply of trucks, slower rail services, port congestion and shortage of containers, supplier delivery times are still long.
Overall, the economy and the service industry are still growing. However, the decline in supply while demand remains high may be reflected in overall price increases.