The ISM index stood at 60.1%, down 3.9 points from May and below the 63% expected by analysts.
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The service sector in the United States continues to recover from the crisis caused by the pandemic but it recorded less rapid growth than expected in June penalized by labor shortages and supply problems, according to the ISM professional federation index published Tuesday.
The index, which measures the level of business activity, stood at 60.1%, down 3.9 points from May and less than the 63% expected by analysts.
This slowdown, however, comes after a record May.
“The rate of expansion in the service sector remains solid, despite the slight decline in the growth rate from the all-time high of the previous month,” said Anthony Nieves, president of the Institute for Supply Management (ISM).
“Challenges related to material shortages, inflation, logistics and employment resources continue to hamper trading conditions,” he added.
Thus, the majority of the components of the index recorded a slowdown.
The one measuring production lost 5.8 points, falling to 60.4%, that of new orders fell to 62.1% (-1.8 point) with new export orders even losing 9.3 points at 50.7%.
Employment fell to 49.3% (-6 points).
ISM cites testimonials in different sectors.
In the restaurant business, an employer thus notes that the recovery to 2019 levels is perhaps “too fast”, pointing out that faced with very strong consumer demand, “the challenges” are numerous. He specifically cites supply chain disruptions, logistics delays and staff constraints.
As a result, some restaurants could not reopen or only with limited hours.
The leisure and entertainment sector is also facing strong demand but a labor shortage as rising prices weigh in.
In the construction sector, some employers are affected by the shortage of many materials such as lumber, copper and steel, which drives up prices and delays.
The service sector, vital to the US economy, has suffered the most from restrictions imposed to contain the spread of the coronavirus.
But thanks to government aid and a rapid vaccination campaign, many establishments are recovering rapidly.
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