Inflation, Labor Shortage and Supply Chain Problems Weighed on Services Sector in June

Shortages of supplies and labor slowed growth in the services sector while pushing prices higher in June, a pair of business surveys revealed Tuesday.

Growth in the services sector, which accounts for over 75 percent of the U.S. economy, cooled a bit in June, separate surveys by the Institute for Supply Management and IHS Markit indicate. Despite the slowdown, growth still remains at historically high levels corresponding with the reopening of many parts of the economy and the increased willingness of consumers to “return to normal” now that mass vaccination has sent the pandemic on the retreat.

The Institute for Supply Management said its business activity index slipped to 60.1 percent from 64 percent in May. That was below the forecast for 63.3 percent.
IHS Markit said its headline index for the services sector notched down two-tenths of a point to 64.6. Economists had penciled in a rise to 65.2.