The rate of expansion of the service sector in the United States, where most Americans work, hit a record high in October as demand remained strong even as supply chain issues persisted.
SILVER SPRING, Md. — The rate of expansion of the service sector in the United States, where most Americans work, hit a record high in October as demand remained strong even as supply chain issues persisted. .
The Institute for Supply Management reported on Wednesday that its monthly survey of service industries – which includes restaurants and bars, trucking companies, hotels and many other businesses – jumped to 66.7 from 61.9 in September.
Although business activity, new orders, supplier shipments and order backlog all surpassed previous records, the ongoing issues 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.
“The big picture painted by this report is that the economy is overheating,” said Stephen Stanley, chief economist for Amherst Pierpont Securities. “The demand is extremely strong while the supply is limited. Still, I’m not sure 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, who include purchasing and supply managers, said they were still struggling to fill positions.
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.
All of these issues, along with high demand, have led to higher prices for just about everything. 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.