ISM August services index 61.7 vs 61.5 expected

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ISM services index for August 2021:

  • Prior was 64.1
  • Employment 53.7 vs 53.8 prior
  • New orders 63.2 vs 63.7 prior
  • Prices paid 75.4 vs 82.3 prior
  • Business activity 60.1 vs 67.0 prior
  • Backlog of orders 61.3 vs 63.5 prior
  • New export orders 60.6 vs 65.8 prior
  • Imports 48.7 vs 51.6 prior
  • Inventories 46.9 vs 49.2 prior

This is close to expectations but I’ll take it as encouraging as it stops the bleeding on a month-long series of data misses. The flat employment number also raises some questions about the disappointing non-farm payrolls reading.

Comments in the report all focus on bottlenecks in products and labor shortages:

  • “Supply chain disruptions – including manufacturing-labor shortages,
    logistics delays and lack of material to make products – are
    significantly disrupting our business.” [Accommodation & Food
    Services]
  • “There is a shortage of available workers which is challenging our
    business operations.” [Agriculture, Forestry, Fishing & Hunting]
  • “Material and labor shortages continue to hinder productivity. Price
    increases are ever-present and repetitive. Large, multinational
    manufacturers have had multiple price increases in the last three
    months.” [Construction]
  • “Budget constraints due to student enrollment (impacted by) COVID-19
    restrictions. Outlook to remain flat or little increase. Supply chain
    constraints with regard to limited supply of computer hardware to
    fulfill orders.” [Educational Services]
  • “Inpatient- and outpatient-services and ancillary-services volumes
    continue to be very high. Driven by increased admissions and increased
    lengths of stay. Pharmaceutical volume is high as well, which relates to
    patient volume in our cancer center. Surgical-case volumes remain
    strong, as do associated physician services. Emergency room visits
    exceeded budgeted levels by 14.2 percent. This volume resulted in an
    increase in diagnostic services, specifically CT scans. In addition, we
    are seeing an increase in COVID-19 patients again.” [Health Care &
    Social Assistance]
  • “Supplies are tight in technology hardware.” [Information]
  • “Temporary labor continues to be in short supply. Transportation
    costs are inflating prices on all products.” [Management of Companies
    & Support Services]
  • “Activity level continues to increase.” [Mining]
  • “Continuing supply chain disruptions and supply cost increases.” [Professional, Scientific & Technical Services]
  • “Chemicals and transportation services are in short supply. Also,
    chip shortages are affecting several large-project time lines.” [Public
    Administration]
  • “Business in all segments continues to gain, both month over month
    and year-to-date versus 2020. Projections and forecasts remain quite
    robust.” [Real Estate, Rental & Leasing]
  • “A limited supply of critical items has caused us to expand our line
    of products and our supplier base. Services like ash cleaning, trash
    removal, internet installations and the like are experiencing staffing
    shortages, causing us to find alternative sources or adjust schedules.
    Travel has increased 60 percent since February for internal employees.”
    [Retail Trade]
  • “Steel shortages continue. Labor constraints at suppliers continue
    to push delivery dates out. Logistics issues (are also ongoing), as
    container space, truck drivers and the like remain difficult to obtain.”
    [Wholesale Trade]

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