US: PMI details and inflationary facts

Economic activity in the US manufacturing sector continued to expand in October, though slightly slower than in September, falling from 60.7 to 59.2. This reading missed the market's expectation of 60.3.

Economic activity in the US manufacturing sector continued to expand in October, though slightly slower than in September, falling from 60.7 to 59.2. This reading missed the market's expectation of 60.3. Business activity in the services sector expanded at a stronger-than-expected pace in early October as my PMI rose to 58.2 from 54.9 in September. That reading exceeded economists' estimate of 55.1. Meanwhile, the composite PMI rose from 55 to 57.3, better than the market consensus of 54.7.

 

The potential for factory production to be plagued by high supply bottlenecks, the energy crisis, semiconductor shortages and supply shortages remains. Therefore, there is still a risk of material shortage in terms of the production curve. Naturally, there will be a prolongation in the delivery times of the suppliers as the demand continues. However, slowdowns in delivery and production will erode demand in the next phase. Producers also face price pressure as rising energy costs add to supply shortages. Therefore, input costs also play an important role at this stage.

 

In services, we're seeing signs that the declining Delta wave will help boost consumer activity, particularly in the US. However, the indirect impact has accumulated through aggravating supply chain restrictions. There are also signs that this is feeding services, adding to inflationary pressures. The activity, on the other hand, is strong in relation to the reduction of Covid-19 activity and movement restrictions in the service sector. Employment trends are also improving in order to meet the increasing demand.

 

The situation related to inflation, the main phenomenon of hawking Central banks, and if there is no problem in the employment-activity equation at the moment, the price pressure criterion will be ahead in order of importance.

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