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News >  Business

U.S. service sector growth surges in May

UPDATED: Thu., June 3, 2021

A worker wears a mask while preparing desserts at the Universal City Walk, in Universal City, Calif., on May 14, 2021.  (Associated Press)
A worker wears a mask while preparing desserts at the Universal City Walk, in Universal City, Calif., on May 14, 2021. (Associated Press)
By Matt Ott Associated Press

SILVER SPRING, Md. — Growth in the services sector, where most Americans work, hit an all-time high in May as people flock to bars, restaurants and other venues across the country that now have fewer or no pandemic-related capacity restrictions.

The Institute for Supply Management said Thursday its monthly survey of service industries jumped to a reading of 64, topping the previous high of 63.7 in March. April’s reading of 62.7 was also considered strong, as any reading above 50 indicates the sector is expanding.

It’s the 12th straight month of expansion in the services sector following a two-month contraction in April and May of last year when businesses were forced to shut down during the early stages of the coronavirus pandemic.

The services report comes just days after the ISM’s manufacturing report, which showed that demand was so strong that companies were struggling to keep up. Supply chain shortages and difficulty finding enough workers contributed to a backlog of orders and late deliveries.

The services report also showed a significant slowdown in deliveries as companies struggle to keep up with demand. The deliveries index, in which a higher number means slower slower deliveries, registered 70.4, 4.3% higher than reported in April. Respondents said port congestion and labor shortages contributed to the delays.

Although services sector employment activity grew for the fifth straight month, it was down 3.5% from April as some respondents to the ISM survey said competition for workers remained intense, while others struggled to find qualified candidates.

The measurement for new orders ticked up in May to 63.9 from the April reading of 63.2, with all 18 industries surveyed reporting increases.

Prices for materials and services also increased to a reading of 80.6, their highest level in the survey since the 83.5 recorded in 2005.

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