U.S. Business Activity Gains Momentum in January -- IHS Markit
By Xavier Fontdegloria
Business activity in the U.S. private sector continued to grow
in January as companies in both the manufacturing and services
sectors saw improvements in new business even as new Covid-19
infections remain high across the country, preliminary data from
IHS Markit showed Friday.
The flash reading for the U.S. Composite Output Index came in at
58.0 in January, up from the 55.3 registered in December. The
reading signals that expansion of activity quickened to the
second-fastest pace since March 2015, IHS Markit said.
The indicator is based on data from the firm's PMI surveys for
manufacturing and services sectors. In January, both the
manufacturing and services sector remained in expansion territory,
with the rate of expansion accelerating compared with that of
December, data showed.
"U.S. businesses reported a strong start to 2021, buoyed by
hopes that vaccine developments will mean the worst of the pandemic
is behind us, and that the new administration will provide a stable
and supportive environment for stronger economic growth," said
Chris Williamson, chief business economist at IHS Markit.
Manufacturers and service providers alike registered quicker
increases in business activity in January, the report said.
IHS Markit's flash U.S. Services Business Activity Index was
57.5 in January, up from 54.8 in December. Economists polled by Dow
Jones expected the indicator to come in at a lower 53.5.
The rise in output was linked to another monthly increase in
customer demand, respondents said, although the pace of new
business growth softened as restrictions placed on firms due to the
Covid-19 pandemic dampened demand.
As for the manufacturing sector, factory activity remained
strong and the PMI held well above the break-even level.
IHS Markit Manufacturing PMI stood at 59.1 in January, up from
57.1 in December and a series record high. Economists expected the
U.S. Manufacturing PMI flash reading to remain broadly stable at
New orders rose markedly due to stronger demand from new and
existing customers, the report said. Meanwhile, significant supply
chain delays, raw material shortages and evidence of stockpiling at
goods producers pushed input prices up, IHS Markit said.
"Capacity constraints are biting amid the growth spurt. Not only
have the last two months seen supply shortages develop at a pace
not previously seen in the survey's history, but prices have also
risen due to the imbalance of supply and demand," Mr. Williamson
Backlogs of work stagnated across the private sector as the rate
of job creation eased to only a modest pace. Goods producers
indicated the quickest increase in employment for two years but
challenging demand conditions in the service sector weighed on
overall hiring, the report said.
Write to Xavier Fontdegloria at firstname.lastname@example.org
(END) Dow Jones Newswires
January 22, 2021 10:19 ET (15:19 GMT)
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