US business activity at more than five-year high; inflation pressures building
WASHINGTON: US business activity raced to a more than five-year high in September, fueled by a surge in new orders, though strong demand strained supply chains and pushed prices higher.
The US economy experienced a surge in business activity in September, reaching a five-year high, according to S&P Global. The surge was driven by an increase in new orders, but supply chain issues and rising prices were notable challenges. The S&P Global Composite PMI Output Index, which measures manufacturing and services sectors, climbed to 58.4 in September, the highest level since July 2021. This rise indicates expansion in both sectors, with a reading above 50 signaling growth.
The economy's expansion rate is estimated at around 5% annually, consistent with the PMI data. Supply chain bottlenecks have been particularly severe, stemming from the ongoing US-Israeli conflict with Iran. Demand for goods has been strong, contributing to rising prices and supply chain delays. The gauge of prices paid by businesses for inputs also reached a five-month high, reflecting the companies' increased pricing power.
Despite this, some companies are struggling to find suitable staff. The Federal Reserve has raised interest rates to combat inflation, with further increases likely. The situation highlights the complex interplay between strong economic growth and persistent supply chain issues.
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