US service sector jobs hit record highs in October
Respondents to the survey said they are still having trouble filling positions
U.S. service sector jobs grew to record highs in October despite lingering supply chain problems across the country.
According to the Institute for Supply Management's Wednesday report, service industries – which include everything from retail to restaurants and bars to trucking companies and hotels – jumped to a Services PMI rating of 66.7% in October, a nearly 5% increase from September. The Services PMI is a composite index based on business activity, new orders, employment, and supplier deliveries. According to ISM, a Services PMI above 49.2 percent indicates growth in the overall economy.
Although business activity, new orders, supplier deliveries, and a backlog of orders all surpassed previous records, sticky issues that have plagued almost every kind of economic activity since infections began to ease in the U.S. continued: labor shortages, supply chain bottlenecks, and higher prices.
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"The broad picture painted by this report is that the economy is overheating," said Stephen Stanley, chief economist for Amherst Pierpont Securities. "Demand is overwhelmingly strong at the same time that supply is constrained. Still, I am not sure that even a fully-functioning supply side, with more labor and a resolution of snags would be able to handle the pace of demand right now."
The reading for employment grew for the fourth straight month in October, but dipped slightly from September, creeping closer to contraction at 51.6%. Respondents to the survey – including purchasing and supply executives – said they are still having trouble filling positions.
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The U.S. has been beset by steep price increases driven by high public spending and an ongoing global supply chain crisis tied to the COVID-19 pandemic. Employers across industries, meanwhile, have struggled to fill vacant jobs.
The labor shortages, along with the difficulties in getting parts and products due to supply chain issues, led to a record reading of 67.3% in the backlog of orders category. Businesses have also had trouble stocking up on goods, with the inventories index declining for the fifth straight month, to 42.2%.
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The prices index rose 5.4 percentage points from September, registering 82.9% in October. That's the highest reading since 2005, when it hit an all-time high of 83.5%.
The Associated Press contributed to this report.