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US business activity rises to 11-month high in April - S&P Global survey

Published Apr 21, 2023 09:52AM ET
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WASHINGTON (Reuters) - U.S. business activity accelerated to an 11-month high in April, according to a survey on Friday, which was at odds with growing signs that the economy was in danger of slipping into recession as higher interest rates cool demand.

S&P Global (NYSE:SPGI) said its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, increased to 53.5 this month. That was the highest level since last May and followed a final reading of 52.3 in March.

It was the third straight month that the PMI remained above 50, indicating growth in the private sector. The survey data was collected April 12-20.

But the so-called hard data are increasingly painting a darker picture. The labor market is cooling, retail sales are declining and manufacturing output is slumping, leading most economists to forecast a recession as early as the second half of the year.

Banks have tightened lending, which could make credit less accessible to households and small businesses. The Institute for Supply Management surveys, which have a longer history, have suggested loss of momentum in the vast services sector in March and significant deterioration in manufacturing conditions.

"Business expectations among U.S. firms remained upbeat during April, with the degree of confidence in the year ahead outlook ticking up to the second-highest since May 2022," S&P Global said in a statement.

The survey's measure of new orders received by private businesses surged to 53.2 this month, also the highest reading since last May, from 50.8 in March. The increase, which was across the services and manufacturing sectors, meant inflation pressures picked up this month. The survey's measure of prices paid by businesses for inputs rose to 61.2 from 59.8 in March.

"This increase helps explain why core inflation has proven stubbornly elevated at 5.6% and points to a possible upturn, or at least some stickiness, in consumer price inflation," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

Businesses also increased headcount, with companies reporting that vacancies were being more easily filled.

The survey's flash services sector PMI rose to 53.7, the highest reading in a year, from 52.6 in March. Economists polled by Reuters had forecast the services PMI falling to 51.5.

The survey's flash manufacturing PMI increased to 50.4, a six-month high, from 49.2 in March. Economists had forecast the index at 49. New orders increased, ending six straight months of contraction.

US business activity rises to 11-month high in April - S&P Global survey
 

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