Growth in the US services sector picked up speed in July, according to the Institute for Supply Management’s Services PMI.

It rose to a reading of 56.7% in July, up from 55.3% in June. Readings above 50% indicate expansion.

The increase was due to growth in business activity and new orders, said Anthony Nieves, chair of the ISM’s Services Business Survey committee. However, the report’s employment index contracted for the second consecutive month.

“Availability issues with overland trucking, a restricted labor pool, various material shortages and inflation continue to be impediments for the services sector,” Nieves said.

The employment index portion of the report had an index level of 49.1%, indicating a contraction, but it was up from June’s 47.4% reading.

Comments from respondents include:

• “Employee turnover, backfills taking longer to locate and onboard.”
• “Difficulties hiring new candidates as we lose more people who retire or leave the company for new opportunities.”

ISM’s data is based on a survey of purchasing and supply executives across the US.