U.S. service-sector jobs hit record highs in October despite ongoing supply chain issues across the country.
According to Wednesday’s report from the Institute for Supply Management, service industries — which include everything from retail to restaurants and bars to trucking companies and hotels — jumped to a services PMI of 66. .7% in October, an increase of almost 5% compared to September. The Services PMI is a composite index based on business activity, new orders, employment and supplier shipments. According to the ISM, a services PMI above 49.2% indicates growth in the overall economy.
Although business activity, new orders, supplier deliveries and a backlog of orders all exceeded previous records, the ongoing problems that have plagued nearly all types of economic activity since infections began to decline in the United States continued: labor shortages, supply chain bottlenecks and rising prices.
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“The big picture painted by this report is that the economy is overheating,” said Stephen Stanley, chief economist for Amherst Pierpont Securities. “Demand is extremely strong at the same time as supply is limited. Still, I’m not sure that even a fully functional supply, with more manpower and problem solving, would be able to handle the pace of demand right now.”
The jobs reading rose for the fourth consecutive month in October, but fell slightly from September, approaching contraction at 51.6%. Survey respondents – including purchasing and supply managers – said they were still struggling to fill positions.
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The United States has been beset by steep price hikes driven by high government spending and a global supply chain crisis related to the COVID-19 pandemic. Employers in all sectors, meanwhile, are struggling to fill vacancies.
Labor shortages, along with difficulties obtaining parts and products due to supply chain issues, led to a record reading of 67.3% in the backorders category. Businesses also struggled to stock up on goods, with the inventory index falling for the fifth month in a row, to 42.2%.
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The price index rose 5.4 percentage points from September, registering 82.9% in October. It’s the highest reading since 2005, when it hit an all-time high of 83.5%.
The Associated Press contributed to this report.