Wednesday, March 29, 2023

US service sector grows at record pace in October

SILVER SPRING, Maryland (AP) – Growth in the US service sector, where most Americans work, hit a record high in October as demand remained strong even with supply chain problems persisting.

The Institute for Supply Management said Wednesday that its monthly survey of the services sector, which includes restaurants and bars, trucking companies, hotels and many more, jumped to 66.7 from a September reading of 61.9.

While business activity, new orders, supplier shipments and backlog exceeded previous records, the unresolved issues that have plagued nearly every economic activity since infections began to subside in the United States continued: labor shortages, bottlenecks in the supply chain and higher prices.

“The big picture drawn in this report is that the economy is overheating,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. “The demand is extremely high, while the supply is limited. However, I am not convinced that even a fully functioning supply side with a large labor force and removal of barriers will be able to keep up with the pace of demand right now. ”

The employment index rose for the fourth straight month in October, but is down slightly from September, approaching a decline to 51.6. Survey respondents, which include purchasing and supply executives, said they continue to have trouble filling vacancies.

Labor shortages, as well as difficulties in obtaining parts and products due to supply chain problems, resulted in a record 67.3 in the backlog category. Businesses also had problems with inventory, with the inventory index declining for the fifth month in a row to 42.2.

All these problems, along with high demand, have led to higher prices for almost everything. The price index rose 5.4 percentage points from September to 82.9 in October. This is the highest since 2005, when it hit an all-time high of 83.5.

Nation World News Desk
Nation World News Desk
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