WASHINGTON: The key US services sector continued to grow at a faster pace in June but companies raised more concerns about trade tariffs that are raising costs and uncertainty in many sectors, according to an industry survey.
The largest sector of the economy is having to adjust how it finds supplies, while firms continue to struggle to find workers, a factor creating transportation backlogs, the Institute for Supply Management said in its monthly report.
ISM said its non-manufacturing index showed the sector has expanded for 101 consecutive months, rising to 59.1 percent, 0.5 point higher than May and overshooting analyst expectations.
Business activity rose another 2.6 points to 63.9 percent while new orders surged 2.7 points to 63.2 percent but the employment index pulled back slightly to 53.6 percent. Any score above 50 percent indicates growth.
As President Donald Trump’s punishing tariffs on $34 billion in Chinese goods are set to take effect Friday, following on tariffs on steel, aluminum and other goods, Anthony Nieves, chair of ISM’s survey committee for the non-manufacturing sector, said numerous firms raised concerns about the trade dispute and the impact on their industries.
“We’re starting to see signs of inflation, not sharp inflation, but definitely inflation,” Nieves told reporters in a conference call. He noted that while many of the increases were fuel-related, prices also are rising for aluminum and steel, goods subject import tariffs.
“There’s a concern about the uncertainty,” he said, adding it remained too early to tell how the price increases would affect consumers.
“If the economy continues to maintain the strength it has now, people will continue to acquire products and services as long as the price points don’t get too out of control,” Nieves said.
“If tariffs were implemented and the economy wasn’t doing so well it would be a different story.”
But companies have been forced to adjust to rising prices, as they report many suppliers refuse to agree to long-term contracts given the price volatility.
The prices index actually slipped 3.6 points to a still-high 60.7 percent, which marked 28 consecutive months of growth.—AFP