U.S. Business Output Expands Most on Record, IHS Markit Says

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A gauge of output at U.S. manufacturers and service providers reached a record high in April, adding to evidence of stronger demand that’s fueling inflationary pressures.

The IHS Markit flash composite index of purchasing managers at manufacturers and service providers increased to 62.2, the highest in data back to 2009, from 59.7 a month earlier, the group reported Friday. Readings above 50 indicate growth.

U.S. Business Output Expands Most on Record, IHS Markit Says

An easing of Covid-19 restrictions and robust sales are driving faster growth in business activity, including a record pace of expansion in orders placed with the nation’s factories, the group’s data showed.

However, supply shortages and shipping challenges are complicating manufacturers’ efforts to meet demand while driving up materials costs at the same time.

Factories and service providers are having greater success passing along higher input costs. The IHS Markit’s composite gauge of prices received rose to a record in March.

“The worsening supply situation is a concern for the outlook, especially in relation to prices,” Chris Williamson, chief business economist at IHS Markit, said in a statement.

“Supply needs to improve to come into line with demand. But with record supply chain delays driving a rise in backlogs of uncompleted work of a magnitude not surpassed for over seven years, firms appear to be struggling to boost operating capacity in the near-term,” Williamson said.

While the group’s gauge of factory output advanced in April at a faster pace, it remains below the readings seen in the four months through February. Supplier delivery times at manufacturers were the longest on record, while a composite gauge of order backlogs at both factories and services matched the second-highest in data to 2009.

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