Business Activity Unexpectedly Jumps
[Stay on top of transportation news: Get TTNews in your inbox.]
U.S. business activity unexpectedly climbed this month to nearly a one-year high, bolstered by stronger services and manufacturing that threatens to reignite inflationary pressures.
The S&P Global flash April composite purchasing managers index rose 1.2 points to 53.5 — the highest since May — the group reported April 21. Readings above 50 indicate expansion, and the gauge has now exceeded that threshold for three months after contracting through the back half of last year.
Firms saw new orders jump to the highest rate in 11 months, especially in the service sector. That allowed businesses to pass on higher costs to customers, resulting in the fastest jump in output prices in seven months.
“The upturn in demand has also been accompanied by a rekindling of price pressures,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement. “This increase helps explain why core inflation has proven stubbornly elevated at 5.6% and points to a possible upturn — or at least some stickiness — in consumer price inflation.”
Want more news? Listen to today's daily briefing above or go here for more info
An uptick in inflation would reverse months of progress, even though price growth is still too fast. The Federal Reserve is expected to raise interest rates again next month, but officials are unsure as to how much further they’ll need to go.
S&P Global’s measure of business activity at service providers rose to the highest in a year, while manufacturing activity expanded for the first time since October. Firms in both sectors boosted employment by the most since July, but still reported growing backlogs amid struggles to attract and retain skilled workers.
Businesses remained upbeat about the outlook this month, with the degree of confidence in the year ahead improving to the second highest since May. Even so, optimism remains below average due to higher interest rates and inflationary pressures.
