Latest Look at Services PMIs: Growth with Constraints

By SBE Council at 6 January, 2022, 2:52 pm

by Raymond J. Keating -

Growth continued in the services sector of the U.S. economy, according to the latest takes from purchasing managers.

It was reported in IHS Markit Services PMI:

"All seven broad categories monitored by the US Sector PMI signalled a rise in business activity during December, up from six in November."

The Institute for Supply Management PMI also reported growth in December in all 16 of the service industries it features.

Anthony Nieves, Chair of the Institute for Supply Management Services Business Survey Committee, pointed to continued growth with supply chain, labor issues and inflation working to constrain such growth. He said:

"The composite index indicated growth for the 19th consecutive month after a two-month contraction in April and May 2020. Although there was a pullback for most of the indexes in December, the rate of growth remains strong for the services sector, which has expanded for all but two of the last 143 months. Business Survey Committee respondents have indicated that they continue to struggle with inflation, supply chain disruptions, capacity constraints, logistical challenges and shortages of labor and materials."

The IHS report also noted supply chain issues for some key sectors.

From a policy standpoint, the needs remain clear: Stop working against entrepreneurs, businesses and investors via tax and regulatory increases, and instead, provide relief from governmental burdens that will free up resources to serve consumers, including by being better able to alleviate supply chain and labor challenges.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.