INSIGHTS AND RESOURCES
Chart of the day: Service sector grew more slowly in May
REAL ECONOMY BLOG | June 03, 2022
Authored by RSM US LLP
The service sector grew more slowly in May as production and prices cooled, according to a report from the Institute for Supply Management on Friday.
Demand, however, remained strong as consumers continued to shift spending from goods to services, especially as the summer approaches. We expect the service sector to continue growing, although at a slower pace as the economy moderates.
The service index dropped 1.2 percentage points to 55.9, the lowest level since February. Still, it marked the twenty-fourth month of expansion in a row; anything above 50.1 indicates growth over time.
Future demand increased as the new order sub-index rose 3 percentage points to 57.6. Inventories, on the other hand, slowed down on the month as supply chain bottlenecks remained a problem.
Employment for the sector expanded again in May after contracting in April. But the pace of employment growth was extremely low at 50.2 because of labor shortages.
One respondent from the professional, scientific and technical services industry said, “Demand for all labor types remains strong, as open positions continue to exceed candidates to fill those positions. Light industrial, heavy industrial and information technology labor roles are particularly difficult to fill. Companies are having to pay more and offer incentives to attract talent. Resignations continue at a record pace across all age groups, and baby boomer retirements continue to increase.”
The same also happened across other industries. Labor shortages and higher input costs gave companies no choice but to keep prices high to protect profit margins. The prices index grew slightly lower on the month, though it remained elevated as inflation continued to be sticky.
Call us at +1 213.873.1700, email us at firstname.lastname@example.org or fill out the form below and we'll contact you to discuss your specific situation.
This article was written by Tuan Nguyen and originally appeared on 2022-06-03.
2022 RSM US LLP. All rights reserved.
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
Vasquez & Company LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.
For more information on how Vasquez & Company LLP can assist you, please call +1 213.873.1700.
Subscribe to receive important updates from our Insights and Resources.