IHS Price Gauges Rise to Records, Stoking U.S. Inflation Concern

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Measures of prices paid and charged by U.S. businesses advanced in March to fresh records as shortages of materials and disrupted supply chains added to inflation concerns.

Firmer demand allowed companies to pass on just some of the higher prices paid for commodities, according to IHS Markit data issued Wednesday that also showed a measure of services activity at its strongest since July 2014.

IHS Price Gauges Rise to Records, Stoking U.S. Inflation Concern

Furthermore, the composite index of new orders at service providers and manufacturers was the firmest since September 2014.

At the same time, the IHS Markit composite gauge of input prices exceeded the prices charged measure by double-digits for only the second time in data back to 2009. That indicates only limited capacity to pass on higher costs to end-users and consumers, suggesting pressure on margins is developing.

Price pressures were also evident elsewhere. Input costs in the euro area rose at the fastest pace in a decade and selling prices for goods and services increased the most in more than two years, another IHS Markit survey showed Wednesday.

While the manufacturing gauge improved in March and matched the second-highest level in records back to mid-2007, supply shortages pushed down factory production growth to a five-month low.

The group’s flash composite index of output at both manufacturers and services eased to 59.1 in March after rising a month earlier to 59.5, which was the highest since August 2014. Readings above 50 indicate growth.

“Another impressive expansion of business activity in March ended the economy’s strongest quarter since 2014,” Chris Williamson, chief business economist at IHS Markit, said in a statement.

“The vaccine roll-out, the reopening of the economy and an additional $1.9 trillion of stimulus all helped lift demand to an extent not seen for over six years, buoying growth of orders for both goods and services to multi-year highs,” Williamson said.

The IHS Markit’s flash manufacturing PMI also showed supply shortages and shipping delays led to the longest delivery times in records back to 2007.

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