US Economic Growth Gains Steam in October Despite Supply Bottlenecks - IHS Markit
By Xavier Fontdegloria
U.S. business activity accelerated in October despite severe
shortages of staff and materials as the services sector revived
from the Covid-19 Delta wave, according to a survey of purchasing
The flash reading for the U.S. Composite Output Index rose to
57.3 in October from 55.0 in September, data from IHS Markit
released Friday showed. A reading above 50 indicates growth, while
a level below 50 signals contraction.
The reading, which is the highest in three months, suggests a
sharp upturn in activity but still weaker than earlier in the year.
The index is based on data from the firm's PMI surveys for
manufacturing and service sectors.
"October saw resurgent service sector activity as Covid-19 case
numbers continued to fall, marking a encouragingly strong start to
the fourth quarter for the economy," said Chris Williamson, chief
business economist at IHS Markit.
IHS Markit's flash U.S. Services Business Activity Index rose to
58.2 in October from 54.9 in September, reaching a three-month high
and topping the 55.5 level expected by economists polled by The
Wall Street Journal.
Service providers reported a quick rise in inflows of new work
which was attributed to stronger demand conditions as Covid-19
related concerns eased.
However, respondents also said they were struggling to cope with
growing sales due to labor shortages and supplier delays.
Service providers continued to increase their average prices in
October, and said higher transportation costs, wages, supplier fees
and material prices were the main drivers of inflation.
The acceleration in services activity didn't replicate to the
manufacturing sector, which saw a slight slowdown in activity amid
severe supply constraints, the data showed.
The IHS Markit Flash Manufacturing PMI declined to 59.2 in
October from 60.7 in September, a seven-month low. Economists
expected the indicator to be at 60.5.
The slower improvement in conditions was driven by a weaker
expansion in output and a moderation in order book growth during
October, the report said. Factory production remains plagued by
constraints, including record supply chain bottlenecks and labor
shortages, it said.
"While the economy looks set for stronger growth in the fourth
quarter, the upward rise in inflationary pressures also shows no
signs of abating," Mr. Williamson said.
Write to Xavier Fontdegloria at email@example.com
(END) Dow Jones Newswires
October 22, 2021 10:19 ET (14:19 GMT)
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