The numbers: The flash reading of the IHS Market US. composite purchasing managers index rose to a record high 62.2 in April from 59.7 in March, according to survey data released Friday.
IHS Markit said its the “flash” services purchasing managers index rose to a record 63.1 from 60.4 in March. Economists polled by the Wall Street Journal were expecting a 61 reading.
The firm’s “flash” manufacturing purchasing managers index rose to a record 60.6 in April from 59.1 in the previous month. Economists were expecting a reading of 60.5.
Any reading above 50 indicates improving conditions. The flash estimate is typically based on approximately 85%–90% of total survey responses each month.
What happened: Manufacturing output jumped despite despite unprecedented supply chain disruptions. New order growth accelerated including from overseas. Input prices were higher and many firms are seeking to pass on greater costs to clients.
The service sector growth was driven by strong client demand and the reopening of ore businesses amid easing of COVID restrictions.
Big picture: The U.S. economy is experiencing boom-like conditions. The Atlanta Fed’s GDPNow estimate for real GDP growth in the first quarter is 8.3%. Economists think second quarter growth could be even better – exceeding 10% gain.
What IHS Markit said: “The worsening supply situation is a concern for the outlook, especially in relation to prices. Supply needs to improve to come into line with demand. But with record supply chain delays driving a rise in backlogs of uncompleted work of a magnitude not surpassed for over seven years, firms appear to be struggling to boost operating capacity in the near-term,” said Chris Williamson, chief business economist at IHS Markit.
Market reaction: Stocks (DOW:DJIA) (S&P:SPX) were higher in early trading on the positive IHS Markit data and a jump in March new home sales.