WASHINGTON, Nov 23 (Reuters) – US business activity slowed in November on labor shortages and material delays, helping prices continue to rise in the middle of the fourth quarter.
Data company IHS Markit said on Tuesday that its US Composite PMI production index, which tracks manufacturing and services sectors, fell to 56.5 in mid-November from 57.6 in October. A figure above 50 indicates growth in the private sector.
The growth rate remains above the pre-pandemic average and is in line with an economy that is gaining momentum after a brief hiatus in the summer.
The services sector was responsible for the decline in activity, as IHS Markets saw “some resistance to rising prices“.
While several companies reported that business was strong due to growth in both domestic and international travel, as well as further easing of restrictions due to COVID-19, the pace of growth slowed compared to the previous months.
“The US economy continues to perform well,” said Chris Williamson, chief business economist at IHS Markit. “However, the slowdown underscores how the economy is struggling to cope with continued supply constraints.”
The survey measure of prices paid by firms for inputs reached 78.1. This is the highest since the series started in 2009 and is after 74.1 October. Higher prices are being passed on to consumers, indicating that inflation may remain uncomfortably high for some time.
A measure of corporate employment has barely changed in the first half of this month. There were 10.4 million job vacancies at the end of September.
Millions of Americans are staying home despite generously funded unemployment benefits ending in early September, more people vaccinated against COVID-19 and companies raising wages.
The pandemic has also prompted early retirement and career changes.
The PMI index for the services sector fell to 57.0 at the beginning of the month, from 58.7 in October.
Economists polled by Reuters had forecast a mid-November reading of 59 for the services sector, which accounts for more than two-thirds of US economic activity.
IHS Markit said unfinished jobs in service sector companies accumulated at the second-fastest pace on record.
Despite the supply crunch, manufacturing activity improved amid an influx of new orders. The survey’s initial manufacturing PMI rose to 59.1 from 58.4 in October. Economists predicted that the sector index, which represents 12% of the economy, would rise to 59.
According to IHS Markit, the cost burden increased at a record pace in mid-November due to difficulties in sourcing supplies and finding cheap transport for goods.
(Reporting by Lucia Muticani; Edited in Spanish by Javier López de Lerida)