–ISM: Supply Bottlenecks in Manufacturing ‘Tricking Down’ To Services
–ISM: Supply Deliveries Slowing; Inventories Up but Still Too Low
–ISM: Ukraine Crisis Pushing Up Fuel Prices, Affecting Overall Service Sector
By Max Sato
The main index showed the sector continued growing for the 21st straight month
but slipped 3.4 percentage points to 56.5 in February from 59.9 in January, staying at the lowest level since 55.9 in February 2021. It was well below the record high of 68.4 in November.
By contrast, data released Tuesday showed that the US manufacturing sector index compiled by the ISM posted the first increase in four months, rising to 58.6 in February from a 14-month low of 57.6 in January, backed by new orders and the fastest growth in backlog orders in 11 years.
“Respondents continue to be impacted by supply chain disruptions, capacity constraints, inflation, logistical challenges and labor shortages,” Anthony Nieves, chair of the ISM Services Business Survey Committee, said in a statement. “These conditions have affected the ability of panelists’ businesses to meet demand, leading to a cooling in business activity and economic growth.”
The new orders index fell 5.6 percentage points to 56.1 in February from 61.7 in January.
Logistical bottlenecks continued to hurt the services sector. The supplier deliveries index stood at 66.2, up from 65.7 in January. A reading above 50 indicates slower deliveries.
The service sector still sees “slowing supply deliveries” as the supply chain constraints for manufacturers are “trickling down,” Nieves told reporters.
The hospitality industry has “other staffing challenges” in addition to the drag from the Omicron-led spike in Covid cases, he said.
The employment index fell 3.8 points into contraction at 48.5 in February from 52.3 in January.
Asked about the impact of the Ukraine crisis, Nieves said it is leading to higher fuel prices and thus affecting the “overall” service sector.
“Raw material increases, labor shortages, wage increases and transportation issues are still the primary issues affecting our operations and pricing,” a company in the accommodation and food services category told the ISM.
A company in the agriculture, forestry, fishing and hunting industry said: “Supply chain challenges continue to result in lower inventories of products and higher costs. The challenges are at the highest point since COVID-19 began.”
The inventories index at 50.8, up 1.4 points from January’s 49.4, and the inventory sentiment index, at 55.3, up 7.8 points from 47.5, grew in February to emerge from contraction or ‘too low’ territory.”