Washington — US service industry activity indicators surged to record highs in October as a decline in COVID-19 cases boosted demand, but companies fell into supply chain disruptions and consequent exorbitant prices. I was still burdened.
The Institute for Supply Management said Wednesday that its non-manufacturing activity index jumped to a reading of 66.7 last month. This was the best since the series started in 1997 with a 61.9 read in September. Numbers above 50 show growth in the services sector, which accounts for more than two-thirds of US economic activity.
Economists surveyed by Reuters predicted that the index would rise to 62.0. The summer wave of coronavirus infection caused by the Delta subspecies has subsided, driving more consumption of services such as air travel and eating out.
Survey measurements for new orders received by service providers surged from 63.5 in September to a record 69.7 last month. Spending is shifting from goods to services.
Some of the higher-than-expected service sector index readings reflect extended delivery times. Supplier delivery survey measurements accelerated from 68.8 in September to 75.6. Reads above 50 indicate slow delivery.
Extended delivery times for suppliers are usually associated with a booming economy and increased customer demand, which makes a positive contribution to the ISM Non-Manufacturing Index. However, in this case, the slow delivery of the supplier indicates a long-standing shortage associated with the pandemic.
This was highlighted by survey measurements of prices paid by the service industry. It competed from 77.5 readings in September to 82.9. Longer delivery times and higher prices reflect the results of an ISM manufacturing survey released Monday, showing signs that high inflation was probably not as temporary as the Federal Reserve believed. I am.
The government reported a record surge in wage increases in the third quarter last week. Tuesday’s report showed that home rent vacancy rates fell in the previous quarter. Wages and rent are the most troublesome elements of inflation.
The Federal Reserve Board of Governors will announce on Wednesday that it will begin reducing the amount it injects into the economy through monthly bond purchases. Inflation far exceeds the central bank’s flexible 2% target.
Due to the lack of raw materials and labor, unfinished work in the service industry piled up in October. The pandemic has overturned the dynamics of the labor market, with 10.4 million employees employed as of the end of August, despite millions of people being unemployed.
Employment measurements in the service industry in the ISM survey have declined for the third straight month, although they remain in the expanding territory. At face value, this suggests that nationwide employment growth in October remained modest after employers hired the fewest workers in the nine months of August.