Business Boom Hits Supply Chain Snags
US business activity reached its highest level in over five years in September, driven by strong new orders and increased hiring. However, this growth is accompanied by severe supply chain bottlenecks, which are pushing prices higher.
The S&P Global Composite PMI Output Index rose to 58.4, the highest reading since July 2021, indicating expansion in both manufacturing and services sectors. The index reflects a strong economy growing at around a 5% annualized rate, but also points to severe supply chain delays and higher prices.
Chris Williamson, chief business economist at S&P Global Market Intelligence, noted that the growth is being accompanied by 'some of the most severe supply chain bottlenecks seen in the near-two-decade survey history if the pandemic is excluded.' The supply constraints stem from the ongoing US-Israeli war with Iran.
The Atlanta Federal Reserve's gross domestic product tracking estimate is running at a 5.1% rate, while the economy grew at a 1.5% pace in the April-June quarter.