Washington – Services sector activity in the United States crept up in July, according to survey data released on Aug 5, although firms continue assessing the impact of higher costs following war in the Middle East.
The services index of the Institute for Supply Management (ISM) inched up by 0.1 percentage point in July to 54.1 per cent, an uptick that was slightly less than what analysts expected.
New orders were up in the month, as was business activity, but the employment index returned to contraction, ISM said.
“Tariff impacts and the Middle East conflict continued to be mentioned by respondents, but much less frequently than in prior reports,” said ISM survey chair Steve Miller.
The World Cup also helped to boost business activity and new orders, he added, noting that the US services economy “continues to be resilient”.
But Miller said: “Concerns still exist regarding mortgage and inflation rates, and we are still in the midst of pricing impacts due to the recent run-up in petroleum costs.”
US energy costs have risen, as have those around the world, since US-Israeli strikes targeting Iran prompted Tehran to nearly block off the Strait of Hormuz.
The waterway is key to global energy transit, and access to the strait has been a sticking point in negotiations to end the conflict.
Iran has tightened its grip on Hormuz, seeking powers it did not have before the war started in late February – such as controlling the strait and charging tolls.
An ISM survey respondent in the construction sector said “sales continue to slide despite increased discounts,” adding that there have been “mounting cost pressures from all fronts”.
Another respondent, in public administration, added that there remains “uncertainty on how the Iran conflict will impact the price of oil, as well as the knock-on effect to construction and other materials”.
“The city has several capital projects pending and ongoing, which will be impacted,” the respondent said. AFP
Source : https://www.straitstimes.com/business/us-services-activity-edges-up-in-july-survey
