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U.S. service price gains were the strongest since 2008 last month as more of the economy re-opens and owners pass on higher labor and gasoline costs, ISM services chair Anthony Nieves told MNI Wednesday.
"Demand would be the lion's share of it," he said of the price gains. The ISM prices index rose 7.6% to 71.8 last month, the highest since September 2008.
Demand for services is only "on the road to recovery," and many consumers are still practicing caution, he said, signaling there is likely more pent-up demand.
Some suppliers are tacking on price increases beyond any extra costs like the surge in gasoline that make shipping more expensive. "The price of oil really affects things throughout the supply chain," he said, and other materials like lumber and copper are also raising costs.
Worker shortages will likely to persist until the economy fully re-opens, Nieves said. "Some of those less skilled positions are the ones that are most impacted by many of the closures right now," he said. "So, until we get a full opening, we're not going to see that rate grow substantially."