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US business activity at more than five-year high; inflation pressures building
Reuters • • business
Key Points:
- US business activity surged to a more than five-year high in September, with the S&P Global Composite PMI Output Index rising to 58.4, indicating strong expansion in both manufacturing and services sectors.
- The economy is growing at an estimated annualized rate of around 5%, supported by a sharp rise in new orders and work backlogs, despite ongoing supply chain delays and capacity constraints.
- Supply chain bottlenecks, largely influenced by the US-Israeli conflict with Iran, have contributed to higher input prices, with the survey's prices paid index hitting its highest level since October 2022.
- Companies are increasing hiring to manage order backlogs but face challenges finding suitable staff, which, combined with strong demand, is adding inflationary pressures.
- The Federal Reserve recently raised interest rates and signaled further hikes, amid concerns that persistent supply shocks and rising costs, including record diesel prices, will continue to push inflation higher.
