Services sector: Economic activity slips from May's all-time high; employment index contracts for first time in five months - Staffing Industry Analysts

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July 06, 2021

The US services sector saw economic activity increase in June, albeit at a slower rate than May, the Institute for Supply Management reported today. However, services employment contracted.

“The rate of expansion in the services sector remains strong, despite the slight pullback in the rate of growth from the previous month's all-time high,” said Anthony Nieves, chair of the Institute for Supply Management Services Business Survey Committee. “Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions.”

The report’s “Service PMI” decreased to a reading of 60.1% in June from 64.0% in May. Readings above 50% indicate growth with higher numbers indicating quicker growth; June’s reading marked the 13th consecutive month of growth in the measure of services sector business activity.

On the flip side, the ISM’s report found that employment activity in the services sector contracted in June after five consecutive months of growth.

The services employment index fell to a reading of 49.3% in June from 55.3 in May. The employment index is one of four diffusion indexes that make up the composite Services PMI. The other diffusion indexes include new orders, production and inventories.

"Labor market remains tight, and wages have risen at an unprecedented rate.” Said Nieves. “We are expecting a long-term effect on pricing of services.”

The report is based on a survey of purchasing and supply executives nationwide. Comments from respondents include: “Increasingly difficult to find qualified candidates to fill open positions” and “Employees have been somewhat slow to return to work, and there has been turnover as some pursue new opportunities in a hot job market.”

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Services sector: Economic activity slips from May's all-time high; employment index contracts for first time in five months - Staffing Industry Analysts
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