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After setting a record 64 in May, the Supply Management Institute’s index measuring the performance of the economy’s service sector fell back to 60.1 in June, the lowest mark since February, as service firms grappled with supply shortages and struggled to hire enough workers.
Economists contacted by the Financial Times expected the rating to dip only to 63.5.
Ratings above 50 indicate growth; the higher the number, the more robust the activity.
Employment in service businesses shrank, with that index dropping from 55.3 in May to 49.3 in June.
“Labor shortages and high input costs will restrain the expansion,” analysts at Oxford Economics wrote in a note quoted by the FT, “but those pressures should slowly lessen in the second half of the year.”
TREND FORECAST: With new restrictions to fight COVID War 2.0, the global economy will not rebound as fast as previously forecast. Thus, unemployment will not fall back to 2019 levels.