By Xavier Fontdegloria


The expansion pace of business activity in the U.S. private sector accelerated to a record-high in April, signaling that the economic recovery gained further momentum at the beginning of the second quarter.

The flash reading for the U.S. Composite Output Index stood at 62.2 in April, up from 59.7 in March, preliminary data from IHS Markit showed Friday. The reading is the highest since data collection began in October 2009, IHS Markit said.

The survey-record expansion of output in April came as looser Covid-19 restrictions and strong client demand boosted business activity.

The indicator is based on data from the firm's PMI surveys for manufacturing and services sectors. In April, a steep upturn in manufacturing production occurred despite unprecedented supply chain disruptions, while services activity growth hit a new high.

"The U.S. economy is enjoying a strong start to the second quarter, firing on all cylinders as loosening virus restrictions, an impressive vaccine roll-out, a brighter outlook and stimulus measures all helped boost demand," said Chris Williamson, chief business economist at IHS Markit.

The upturn is broad-based, with both the service sector and manufacturing expanding at solid rates. The latter was all the more impressive, as factories continued to be throttled by unprecedented supply-chain delays, he said.

IHS Markit's flash U.S. Services Business Activity Index came in at 63.1 in April, up from 60.4 in March and a series record high. Economists polled by The Wall Street Journal expected the indicator to come in at 61.0.

Service providers reported a significant acceleration in new business growth amid the reopening of large portions of the economy, the report said. Average cost burdens continued to rise markedly in April, and the rate of charge inflation quickened as stronger client demand allowed firms to pass on a greater proportion of increases in input prices to clients.

IHS Markit Manufacturing PMI was 60.6 in April, up from 59.1 in March, reaching a record high. Economists expected the U.S. Manufacturing PMI flash reading to increase to 60.5.

Manufacturers signaled a sharp rise in output during April, but many firms stated that production capacity was hampered by an inability to source raw materials and inputs in a timely manner, the report said.

Meanwhile, input costs increased at the sharpest rate since July 2008. Higher input prices were reportedly due to severe supplier shortages and marked rises in transportation fees, IHS Markit said.

"The worsening supply situation is a concern for the outlook, especially in relation to prices," Mr. Williamson said. With record supply-chain delays driving a rise in backlogs of uncompleted work of a magnitude not surpassed for more than seven years, firms appear to be struggling to boost operating capacity in the near-term, he said.


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(END) Dow Jones Newswires

April 23, 2021 10:23 ET (14:23 GMT)

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