Jobs data at odds with jobs data: Unpacking mixed signals from the labor market recovery
Data: Institute for Supply Management; Chart: Axios Visuals
The pace of hiring activity in services industries declined in June, according to the Institute for Supply Management.
Why it matters: Labor supply constraints continue to limit the U.S. economy’s ability to grow.
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This was a reason the ISM services index fell to 60.1 in June from 64 in May, a sign that growth in the services sector is decelerating.
The ISM services index is a measure of activity in nonmanufacturing businesses. Services account for 103.5 million jobs, or 71%, of the U.S. payrolls.
By the numbers: The ISM’s services employment index — a subset of the overall index — fell to 49.3 in June from 55.3 in May, which means the amount of hiring went down.
What they’re saying: "Businesses haven’t been able to staff according to the demand levels," Anthony Nieves, chair of the ISM’s Services Business Survey Committee, told Axios.
"The labor markets are not there for some of these different services industries."
Yes, but: "That is at odds with the apparent message from the latest payroll figures, which suggested that employment growth is accelerating," Capital Economics’ Michael Pearce observed.
Indeed, according to the June U.S. payrolls report, the services sector added 642,000 jobs in June, up from 497,000 added in May.
The bottom line: Expect mixed signals occasionally in short-term data, due to all sorts of data quality issues that have emerged during the pandemic.
But even amid this noise, the bigger themes seem to prevail.
"The comments accompanying the survey make clear that labor shortages and supply shortages are still squeezing output," Pearce wrote.
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