The Services Purchasing Managers' Index (PMI) registered 64.1 percent, 4 percentage points higher than the June reading, according to the latest Services ISM Report on Business. Any reading above 50 percent indicates the services sector is generally expanding.
The composite index, which eclipsed the previous record of 64 percent in May this year, indicated growth for the 14th consecutive month after a two-month contraction in April and May 2020, the report noted.
The Prices Index, in particular, registered 82.3 percent, up 2.8 percentage points from the June figure and marking the second-highest reading ever, behind September 2005 (83.5 percent), according to the ISM.
"Costs have risen dramatically in the last 45 days. Lodging, fuel, travel and supplies are all rising sharply," said a business executive from the construction industry. "Costs for available labor are also rising, as demand increases in a diminished labor pool."
Anthony Nieves, chair of the ISM's Services Business Survey Committee, noted that the Employment Index reflected growth, "even though the constrained labor pool continues to be an issue."
"Materials shortages, inflation and logistics continue to negatively impact the continuity of supply," said Nieves.
A business executive from the health care & social assistance industry, meanwhile, also noted that the Delta variant is impeding their ability to manage increased surgical volumes due to increased COVID-19 case admissions.
The services PMI was released two days after the ISM reported a slower growth in manufacturing, with Manufacturing PMI registering 59.5 percent in July amid continued supply-chain constraints, down 1.1 percentage points from the June reading.
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