There was a surge in the US manufacturing activity to its highest level in almost 14 years in early January this year. But there is a bottleneck that is caused by the Covid pandemic that will drive up the price and show signs of the rise of inflation in the months to come.
There was data collected and reviewed on Friday that showed an surprise increase in sales of pre-owned houses in December, it is the housing and manufacturing market that’s helping to keep the economy in place, which is being thrashed by the waves of corona, as the pandemic is causing labour loss in the areas of construction which could in that case cause a delay in manufacturing and housing.
IHS Markit is a data firm that gave the numbers showing that manufacturing PMI went up to 59.1 in the first half of this month which is the highest it’s been since May 20017 from 57.1 in December. Economist have forecasted that this number would slip to 56.5 in early Jan but a reading over the number of 50 indicated a growth in the manufacturing sector which also accounts for 11.9% of the US economy.
The survey also measured the new instructions and orders received by factories and it seems the levels have been the highest since September 2014. This surge in demand show that there is new customers as well as existing ones. This also made more employment opportunities and the factory employment index also rose from 52.2 to 54.8.
But there are issues with the pandemic that’s stopping or halting the supply chain and this is causing the manufacturers to pay extra for materials than they usually would, which they then try to recover by selling it at a higher price to the consumer. This could cause the downfall that is being predicted by economist in March and April.
There are other factors that also help in the lift of the business activity and the survey helps one to understand this by showing an output index, which will record the manufacturing and service sectors. The service sector accounts for more than 2/3rd of the American economies activity and has also taken the hardest hit during this pandemic, as there have been a loss of clients going to restaurants and bars and other business that need crowds to survive.
According to the numbers on the survey the service industry employment fell in early January where employment had more or less stopped and the stock trade was not doing well but the dollar remained steady as a currency.
The national association of realtors said in a report that existing home sales have increased by 0.7% and the economist say that it will decrease by 2%in December. It is the resale of homes that account for the US surge of 22.2% on a yearly basis. In 2020 they totaled 5.64 million which was the highest since 2006.
