Business Activity Softens as Supply Constraints Linger

Business Activity Softens as Supply Constraints Linger
An employee welds a specialized metal product in the shop at the Amuneal Manufacturing plant in Philadelphia. (Paul Taggert/Bloomberg)

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Growth in U.S. business activity softened this month as service providers and manufacturers remained constrained by higher inflation, supply shortages and hiring difficulties.

The IHS Markit flash composite purchasing managers index slipped to 56.5 in November from 57.6 a month earlier, the group reported Nov. 23. Readings greater than 50 indicate expanding activity. The gauge of manufacturing activity improved, while services growth eased.

“The U.S. economy continues to run hot,” Chris Williamson, chief business economist at IHS Markit, said in a statement. While overall business activity cooled, “growth remains above the survey’s long-run pre-pandemic average as companies continue to focus on boosting capacity to meet rising demand.”


“However, the slowdown underscores how the economy is struggling to cope with ongoing supply constraints,” Williamson said.

The IHS Markit composite index for input costs jumped to a fresh record, while the measure of prices received remained at a series high.

The group’s composite measure of order backlogs was little changed from a month earlier and the second-highest in data to October 2009.


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The IHS Markit flash factory index rose to 59.1 in November from 58.4 a month earlier, aided by stronger output and orders. Meantime, finished-goods inventories at manufacturers shrank at the fastest pace since May of last year.

With limited inventory, production will have to pick up to satisfy demand, which should happen once capacity constraints ease.

The group’s preliminary reading of services for the month slipped to a still-robust 57, from 58.7 in October.

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