WASHINGTON – U.S. business activity regained speed in February as the drag from the winter surge in COVID-19 infections diminished, but higher prices for inputs remained a burden amid lingering supply constraints.
Data firm IHS Markit said on Tuesday its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, rebounded to a reading of 56.0 this month from 51.1 in January. It attributed the sharp rise to “employees returning from sick leave, increased traveling and greater availability of raw materials.”
A reading above 50 indicates growth in the private sector.
The acceleration in business activity in the survey mirrors the recent improvement in the so-called hard data.
Initial claims for state unemployment benefits have declined from a three-month high of 290,000 in mid-January and retail sales shot up in January.
The United States is reporting an average of 121,134 new coronavirus cases a day, sharply down from more than 700,000 in January, according to a Reuters analysis of official data. The Omicron variant of the coronavirus is driving infections.
The flash composite orders index climbed to 57.5 from 55.2 in January, with customers making additional purchases to avoid future price hikes. Consumer prices notched their largest annual increase in 40 years in January.
The survey’s measure of input prices paid by businesses rebounded from January’s ten-month low.
The pick up in activity this month was across the board. The IHS Markit survey’s flash services sector PMI rose to a reading of 56.7 from 51.2 in January.
Economists polled by Reuters had forecast a reading of 53.0 this month for the services sector, which accounts for more than two-thirds of U.S. economic activity.
Services industry businesses reported increases in orders and employment. They continued to face higher prices for inputs.
Activity also regained momentum in the manufacturing sector, with strong order growth and rising employment. The survey’s flash manufacturing PMI climbed to 57.5 from 55.5 in January. Economists had forecast the index for the sector, which accounts for 11.9% of the economy, rising to 56.0.
Manufacturers also reported some easing in the cost of inputs, though prices still remained very high.
(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)