Afternoon Coffee: Services sector expands but slows, PMI shows; Calif. voters let Uber, Lyft keep driver status as gig workers; Online holiday shopping, shipping: ‘It’s going to be hell’

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Economic activity in the services sector continued to grow in October, according to the latest Services ISM Report on Business numbers released Tuesday. The services PMI — formerly known as the Non-Manufacturing NMI — registered 56.6% in October, according to the report.

The October number was 1.2% percentage points lower than the September rate of 57.8%. However, October’s reading represents growth in the services sector because any number above 50 counts as growth. The number represents the fifth straight month of growth after a contraction in April and May because of the COVID-19 crisis.

“There has been a slight pull-back in the rate of growth in the Services Sector in the month of October,” Anthony Nieves, the chair of the ISM Services Business Survey Committee, said in a press release. "Respondents' comments are cautiously optimistic about business conditions and the economy. There is a degree of uncertainty due to the pandemic, capacity constraints, logistics and the elections.”

California voters allow Uber, Lyft to classify drivers as gig workers

California voters brought rideshare companies Uber and Lyft to victory when they voted to approve Proposition 22 in the state, a ballot measure that allows gig companies to classify drivers as independent contractors, according to the New York Times.

The proposition was designed to exempt the companies from a state labor law that would force them to employ drivers, thus paying for things like healthcare, unemployment insurance and other benefits. The Associated Press projected on Wednesday that Prop. 22 carried 58% of the vote, the article reported.

The vote resolves one of the most public and fiercest regulatory battles that Uber and Lyft have faced. It opens a path for the companies to continue to remake labor laws across the country, the article said.

“California has spoken,” Geoff Vetter, a spokesman for the campaign, said in a news release, the NYT reported. “Prop. 22 represents the future of work in an increasingly technologically-driven economy.”

Retailers and carriers look to holiday peak season with dread, cautious optimism

The massive uptick in e-commerce shopping for the last few months has left retailers and mail carriers looking forward to the holiday peak with a mix of dread and cautious optimism, according to the website Glossy.

Major carriers like UPS, FedEx and the United States Postal Service have had to turn away new customers to meet the current demand. FedEx says is expects to deliver as many as 7 million packages a day during the holiday peak this year, the article said. Salesforce data said the total packages estimated to ship this season, around 700 million, is 5% more than the delivery ecosystem the U.S. is capable of handling.

“Right now, UPS is at least a day late on everything,” Guido Campello, co-CEO of intimates brand Journelle, told Glossy. “And it’s just going to get worse. It’s really hard, unless it’s just documents, to get anything shipped in a timely way right now. Space is going to run out and things will be late. We had a really important shipment for a big retailer that should have arrived four days ago, and it’s still not there. People will receive December orders in January. It’s going to be hell.”

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