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While U.S. business activity rose to its highest level in more than two years this month, manufacturers reported a surge in prices, suggesting inflation could continue to grow in the coming months, Reuters reports.
S&P Global’s flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, jumped to 54.4 this month—the highest level since April 2022—and followed a final reading of 51.3 in April. A reading above 50 indicates expansion in the private sector.
While economists had previously predicted the index would remain stagnant at 51, the increase was driven by the services sector.
At face value, the jump in activity suggests that economic growth picked up midway through the second quarter.
“Business confidence has lifted higher to signal brighter prospects for the year ahead,” says Chris Williamson, chief business economist at S&P Global Market Intelligence. “However, companies remain cautious with respect to the economic outlook amid uncertainty over the future path of inflation and interest rates, and continue to cite worries over geopolitical instabilities and the presidential election.”
