US data too good. Price risk
The news from the US economy is "Unfortunately positive". IHS Markit forecasts are positive, too much, and this can lead to inflationary problems.
Let's look at the Markit data starting with manufacturing:
IHS Markit's US manufacturing PMI jumped to a new high of 61.5 in May 2021, beating the market forecast of 60.2 amid stronger customer demand. New orders also increased at a record pace while production growth accelerated despite the sharp deterioration in supplier performance due to limited operational activity. Later, job arrears accumulated at the fastest pace ever as businesses were held back by a shortage of raw materials.
Now the services have also shown outstanding results:
According to a preliminary estimate, the IHS Markit US Services PMI jumped to 70.1 in May 2021, from 64.7 the previous month and well above market expectations of 64.5. The latest reading indicated the sharpest rate of expansion since data collection for the series began in October 2009, against a backdrop of increased customer confidence and reopening of non-essential businesses. New order growth accelerated to its all-time high, with new export activities increasing the most since August 2020, while the pace of job creation remained solid. On the price front, both input prices and output costs have increased at record rates. Also in this case, exceptional data, never seen in the last five years.
The data is, as we have said, very good. There is talk of productive bottlenecks of mass hiring in both sectors. This means that there are necessarily inflationary pressures. Bottlenecks lead to increases in the prices of semi-finished products and raw materials, while strong demand for labor in the face of still limited supply is leading to positive wage dynamics. So beware that the flare-up on prices could also be present in May.
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The article US data too good. Price risk comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/dati-usa-troppo-buoni-rischio-sui-prezzi/ on Fri, 21 May 2021 19:49:10 +0000.