By Lucia Mutikani By
(Reuters) – US services sector activity grew at a moderate pace in June, possibly halted by labor and raw material shortages, resulting in a sustained increase in unfinished business.
The Institute for Supply Management (ISM) on Tuesday said its index for non-manufacturing activity fell to 60.1 last month, up from 64.0 in May, the highest in the historical series.
Figures above 50 indicate growth in the services sector, which accounts for more than two-thirds of US economic activity. Economists polled by Reuters predicted a recession of 63.5 in June.
The US economy was hit by labor and raw material shortages when it reopened after more than a year of disruptions caused by the COVID-19 pandemic. Now, more than 150 million Americans have been fully immunized against the coronavirus, resulting in the lifting of pandemic restrictions on companies and the mandatory use of masks, prompting demand to move from goods to services. is.
The ISM sub-index of the backlog increased from 61.1 in May to 65.8. While new orders remained good and there is ample room for significant gains in the coming months, shares declined in June. Inventory sentiment for customers remained poor. Commercial inventories ran out in the first quarter amid sluggish demand.
With the supply crunch showing no signs of easing, companies continued to pay more for inputs. The ISM survey of prices paid by the services sector fell to 79.5 from 80.6 in May, a still high, the highest record since September 2005. Continued growth supports the view of some economists that higher inflation will be more stable than predicted. by the Federal Reserve.
The ISM measure of service jobs declined to 49.3 in June from 55.3 in May. However, there is cautious optimism that the labor shortage is beginning to ease.