U.S. Services Gauge Progresses to Record High

U.S. service providers expanded at a record pace in October, this surge comes on the back of resilient demand and stronger business activity as the impact of the delta variant faded.

The Institute for Supply Management’s services index advanced to 66.7 last month, exceeding all expectations, from 61.9 in September, data showed Wednesday.

Readings above 50 signal growth of economic activity. The gauges of new orders and business activity also increased to the highest in data back to 1997, indicating the economy picked up steam at the start of the fourth quarter.

Steadfast household and business demand also suggests little respite for still-stressed supply chains that are contributing to higher inflation. The group’s measure of backlogs also rose to a record last month.

Demand shows no signs of slowing, however, ongoing challenges, including supply chain disruptions and shortages of labor and materials, are constraining capacity and impacting overall business conditions.

The ISM’s measure of prices paid by service providers for materials and services increased to the highest level since September 2005. An index of supplier delivery times climbed to the second highest on record, indicating extended delays and lingering capacity constraints.