This post was originally published on this site
Hotels, restaurants, retailers and other businesses that employ most Americans grew more slowly in August, but ongoing labor and supply shortages appeared to be a bigger culprit than the delta strain of the coronavirus.
A survey of service-oriented businesses fell to 61.7% last month from a record 64.1% in July, the Institute for Supply Management said Friday. That was in line with the forecast of economists surveyed by The Wall Street Journal.
Any reading above 50% signals expansion, and numbers above 60% are exceptional.
A surge in delta cases late in the summer appeared to stunt the U.S. economic recovery, but the ISM survey suggests the virus was not as big a factor as a weak August employment report implied.
“Demand for labor is clearly quite high, but the supply remains limited with people delaying their return to work,” said money-market economist Thomas Simons of Jeffferies LLC.
Read: U.S. adds just 235,000 jobs in August as delta dents hiring and slows economy
Most executives who were polled blamed persistent shortages of supplies and labor that are preventing them from producing enough services to meet high customer demand. These shortages have also sharply raised costs and contributed to the biggest increase in inflation in the U.S. in 30 years.
Few executives cited Covid as one of their biggest constraints.
“Material and labor shortages continue to hinder productivity. Price increases are ever-present and repetitive,” said an executive at a construction company.
Read: Consumer confidence sinks to 6-month low on delta anxiety and inflation
Also: Inflation in the U.S. is running at the highest level in 30 years
“Supply chain disruptions—including manufacturing-labor shortages, logistics delays and lack of material to make products —are significantly disrupting our business,” an executive at food-services provider told ISM.
The Dow Jones Industrial Average
DJIA,
and the S&P 500
SPX,
fell in Friday trades after a weak employment report for August.
