U.S. service providers expanded in July at the fastest pace in records dating back to 1997 as measures of business activity, new orders and employment all improved.

The Institute for Supply Management’s services index jumped to 64.1 last month from 60.1 in June, topping all estimates in a Bloomberg survey of economists. Readings above 50 indicate expansion.

The figures underscore the massive vaccine-fueled snapback in demand for services like dining out and travel in recent months. A gauge of business activity jumped almost 7 points to a near-record 67 and new orders growth accelerated.

At the same time, global demand is picking up. New export orders for U.S. service providers expanded at the fastest pace since 2007.

Still, Wednesday’s report underscores how supply constraints are limiting faster growth in the pandemic-battered sector and pushing prices higher. Order backlogs—which rose to a record in June—remain elevated and inventories contracted for a second straight month, indicating demand continues to outstrip supply.

“Materials shortages, inflation and logistics continue to negatively impact the continuity of supply,” Anthony Nieves, chair of the ISM’s Services Business Survey Committee, said in a statement.

Prices paid by service providers jumped to 82.3 last month, the highest level since September 2005. Meantime, delivery times lengthened, with a gauge of supplier deliveries rising to its second-highest reading on record.

Select ISM Industry Comments

“Peak demand while still facing challenges filling open positions.” - Accommodation & Food Services

“Costs have risen dramatically in the last 45 days. Lodging, fuel, travel and supplies are all rising sharply. Costs for available labor are also rising, as demand increases in a diminished labor pool.” - Construction

“Labor shortage continues for drivers and general labor work. We have increased pay for many positions, but the shortage continues.” - Management of Companies & Support Services

“Continued shortages in computer equipment (laptops and PCs) are challenging for fulfillment needs. Corporate travel has resumed, but we’re seeing many flight cancellations and car-rental shortages.” - Retail Trade

“Ocean freight costs have created a negative impact to our business. The congestions at (the ports of) Long Beach/Los Angeles and Seattle have increased lead time by 15 days. Additional delays are occurring at the Chicago rail yard, (causing) two to three weeks of additional lead time.” - Wholesale Trade

There are hints that hiring obstacles may be lessening some. The employment index rose to 53.8—indicating growth—after contracting in the prior month.

The figures surface ahead of Friday’s monthly employment report. Economists estimate 875,000 jobs were added in July, marking the biggest gain since August. A report earlier on Wednesday from ADP Research Institute showed payrolls at companies rose 330,000 in July, the smallest advance in five months and missing all estimates.