Service Industry Growth in U.S. Slows Down

The service industry in the United States, the biggest industry in the country, slowed down in growth after expanding in previous months, according to a new Institute for Supply Management report. According to this report, the service industry fell to a reading of 62 in December. In November, the reading was at an all-time high at about 69.1. 

The service industry as a whole slowed down, according to this new data. New orders, business activity, deliveries, and employment all slowed down, which resulted in this large decrease in growth. However, any reading above a 50 is still considered growth, so the service industry hasn’t completely decreased, or stopped growing. Instead, the rate of growth has just slowed down after hitting record highs.

There are possibly many reasons why the service industry has slowed down. While it is interesting that this happened in December, one of the biggest months during the peak holiday shopping season, this year has been particularly unique because of the COVID-19 pandemic. As the pandemic remains fluid and continues to exist and impact many industries and businesses, growth occasionally slows down. 

Many people started buying their holiday gifts earlier in the year, rather than wait until December right before the holidays to purchase the items that they want. This could have led to fewer orders or supply deliveries in December, especially if the industry increased in these areas in November and October. Therefore, after huge increases, the service industry simply slowed down as it easily met high consumer demand earlier. 

The service industry is the largest industry in the United States and is composed of the majority of workers in the country. The industry includes a variety of businesses and other industries, all of which can be impacted differently by the ongoing COVID-19 pandemic.

The pandemic itself could have negatively impacted the service industry and caused growth to slow down in December. The highly contagious Omicron variant was first revealed in late November. There has not been any consistent data to show that this new variant has negatively impacted the economy, yet. It’s very possible that this new variant did in some way affect service growth, especially if it hampered hires and employees. 

The ongoing global supply chain problems likely greatly contributed to this slowing of growth in the service industry. The supply chain has made many businesses suffer when it comes to delivering goods and supplies — and these areas have notably decreased in December according to this new data. As a result, if these global supply chain issues continue to be such massive problems, then growth in the service industry may continue to slow down, and could even decrease after a while. 

Economists are continuing to keep an eye on the global supply chain for this reason. While analysts don’t believe it will be fully fixed any time soon, major problems in the chain should be ironed out in 2022. If the Omicron variant of the coronavirus continues to be an issue, however, this progress could be hampered.