The U.S. economy has had a strong start in 2024, as indicated by a recent snapshot. Both the manufacturing and services sectors are showing signs of improvement, while inflationary pressures are cooling down. According to S&P Global, the flash U.S. Composite PMI Output Index, which tracks these sectors, reached 52.3 this month, the highest level since June of the previous year. This increase from December's reading of 50.9 was driven by gains in both services and manufacturing activity.
The higher composite reading is in line with economists' predictions of continued growth for the economy this year, albeit at a moderate pace. Additionally, the receding inflation indicated in the survey further supports expectations that the Federal Reserve will begin reducing interest rates sometime in the first half of 2024.
However, companies have also reported increased delays in obtaining materials, which could potentially lead to upward pressure on raw material prices. S&P Global Market Intelligence's chief business economist, Chris Williamson, noted that the survey reveals intensified supply delays alongside tight labor markets. As a result, closely monitoring cost pressures in the upcoming months becomes crucial. Nevertheless, the survey overall delivers a positive message of resilient economic growth and a significant decline in inflation.
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