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Employment Remains Strong as Services Sector Sees Seventh Consecutive Month of Growth

Hillary Cargo
By Hillary Cargo Senior Editor, SME Media

The services sector of the US economy continues to show resilience and expansion, marking its seventh consecutive month of growth in July. According to the latest Services ISM Report On Business, the Services PMI registered 52%, a slight decrease from June's reading of 53.9%. The report, released by the Institute for Supply Management (ISM), indicates a positive trend in various aspects of the services sector, including employment.

Anthony Nieves, chair of the ISM Services Business Survey Committee, noted that while the Services PMI saw a modest decline, the overall picture remains promising. The Business Activity Index stood at 57.1%, indicating growth for the 38th consecutive month. The New Orders Index also remained in expansion territory, with a reading of 55% for the seventh consecutive month, despite a 0.5% percentage point decrease from June.

One of the notable highlights in the report is the employment situation in the services sector. After contracting in May, employment activity rebounded in June and continued to grow in July, as the Employment Index registered 50.7%. Although down 2.4% points from the previous month, the index still indicates employment growth. This positive trend reflects the efforts of businesses to maintain a stable workforce amidst ongoing challenges in the job market.

The Supplier Deliveries Index saw a slight improvement, registering 48.1%, while the Prices Index surged by 2.7% points to reach 56.8%. The Inventories Index grew for the third consecutive month, standing at 50.4%. Notably, the Backlog of Orders Index showed significant improvement, increasing by 8.2% points to 52.1% in July. These figures suggest that businesses are facing increasing demand for their services, leading to potential future growth.

The report also provides insights into the performance of various industries within the services sector. Fourteen industries reported growth, including Other Services, Construction, Accommodation & Food Services, and Public Administration. However, four industries, such as Mining and Agriculture, Forestry, Fishing & Hunting, experienced a decrease in July.

Despite the challenges posed by supply chain disruptions, labor shortages and inflationary pressures, the majority of respondents expressed cautious optimism about business conditions and the overall economy. This sentiment indicates a positive outlook for employment prospects and economic growth in the coming months.

Employment remains a critical factor in the services sector's performance, as it directly impacts businesses' ability to meet growing demand and sustain operations. As the US economy seeks stability and growth, the services sector's continued expansion, along with steady employment figures, reinforces the nation's economic progress.

The Services PMI serves as an essential indicator of economic health, and its consistent growth demonstrates the services sector's pivotal role in the overall economy. The report's findings signify a robust and resilient services industry, contributing significantly to the nation's recovery and progress.

As businesses navigate the changing landscape, maintaining a strong workforce becomes crucial for continued growth and success. The services sector's performance provides valuable insights into the broader economic outlook, with positive indicators hinting at a promising future for businesses and employees alike.

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