Economy Stabilizes But Inflation Heats Up: Top 5 Charts From February's U.S. Flash PMI Data

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Business activity successful nan US picked up successful February according to nan latest business study information from S&P Global, but value pressures besides showed signs of remaining stubbornly elevated.

Having started 2023 connected a soft note, nan PMI surveys showed business output crossed manufacturing and services returning to maturation successful February. Growth was confined to services, however, and could beryllium successful portion linked to lukewarm upwind for nan clip of year. Manufacturing remained successful decline.

While nan downturn successful nan goods-producing assemblage took unit disconnected earthy worldly prices, notably via nan sharpest betterment successful supplier transportation times seen since 2009, mean prices charged for equipment and services roseate astatine nan steepest complaint since October, driven higher partially by further costs pressures.

The interest is that, by perchance stoking concerns complete a wage-price spiral, accelerating value growth will adhd to calls for higher liking rates, which could successful move subdue nan nascent description recorded by nan February surveys.

Below we database 5 cardinal charts from nan latest study data.

1. US output returns to growth

The provisional 'flash' PMI information for February brought encouraging news, arsenic output showed signs of returning to growth. The header Flash US PMI Composite Output Index registered 50.2, up sharply from 46.8 successful January. The latest reference was nan highest for 8 months and signaled a marginal emergence successful output aft 7 months of continual decline.

Despite headwinds from higher liking rates and nan costs of surviving squeeze, study responses indicated really nan business temper has brightened amid signs that ostentation has peaked and recession risks person faded. At nan aforesaid time, proviso constraints person alleviated.

2. US work assemblage stabilizes but remains subdued

The astir marked alteration successful capacity was recorded successful nan work sector, wherever business activity accrued for nan first clip since past June. However, it should beryllium noted that nan services' activity gauge remains beneath its long-run average, hinting astatine still-subdued conditions, and February's improved capacity could besides successful portion beryllium attributed to cases of unseasonably lukewarm upwind having encouraged activity successful galore outdoor-based businesses, which whitethorn beryllium temporary.

3. US manufacturing downturn remains solid

There was besides immoderate amended news from nan manufacturing sector, wherever nan flash PMI output scale roseate for a 2nd period running. However, erstwhile again location are caveats, arsenic nan scale remained successful contraction territory and has now signaled falling accumulation successful six of nan past 8 months, nan latest emergence simply pointing to a slower complaint of contraction.

While nan charismatic manufacturing accumulation information showed an description successful January, anterior months had been negative, meaning connected a little volatile three-month-on-three-month basis, nan assemblage has slipped into its steepest downturn since 2009 (if pandemic lockdown months are excluded). The latest PMI information truthful hints astatine this anemic underlying accumulation inclination persisting into February.

4. Supply chains amended to top grade since 2009

The sustained downturn successful manufacturing meant factories again reduced their input buying, which successful move took unit disconnected proviso chains, and besides took pricing powerfulness distant from suppliers.

The magnitude of equipment bought by manufacturers fell for a seventh consecutive period successful February, generating different marked autumn successful inventories arsenic firms sought to power costs overheads.

Average supplier transportation times meantime shortened to nan top grade since May 2009 arsenic suppliers were little engaged successful gathering this reduced request for inputs.

While mean prices for these inputs continued to rise, nan summation was nan second-smallest seen since precocious 2020. This shifting of pricing powerfulness from suppliers to buyers is usually suggestive of user value ostentation besides easing successful nan months ahead.

5. Inflation pressures displacement from proviso chains to labor

However, whereas manufacturing input costs ostentation eased successful February owed to improving proviso chains, mean trading prices for equipment leaving nan mill gross roseate astatine a faster complaint for a 2nd successive month, successful portion because firms reported nan request to walk done upward unit connected wages.

Similarly, mean prices charged for services roseate astatine an accrued rate. Measured crossed some equipment and services, mean prices charged roseate successful February astatine nan fastest complaint since past October. While still acold beneath nan study highs seen past year, nan elevated quality of these value gauges propose immoderate worrying stickiness to inflation.

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Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

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