US businesses raise prices at fastest rate since 2022 as supply chains tighten

US businesses reported a slower pace of expansion in October even as they lifted prices at the fastest rate since August 2022. S&P Global’s flash Composite PMI Output Index fell to 57.6 from 58.4 in September, while its output prices gauge rose to 59.8 from 58.4.

The figures came in S&P Global’s flash data released on Friday, from a survey of private-sector activity across the US economy in October. A reading above 50 signals private-sector expansion.

The tension was clear in the orders data. New orders edged up to 58.2 from 58.1 in September, reaching their highest level since March 2022. S&P Global said rising domestic demand, partly supported by precautionary stock building, and export growth had driven the increase.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said cost pressures remained a central concern. He said supply-chain bottlenecks had intensified and order backlogs were growing, making it easier for companies to pass higher costs on to customers.

Supplier delivery performance to manufacturers worsened further. The survey’s delivery-times measure dropped to 38.1 from 40.9 in September, a more than four-year low.

Businesses’ input-price measure, meanwhile, eased to 64.9 from 65.9 in September. Even so, strong demand and strained supply chains coincided with a sharper increase in prices charged to customers.

Manufacturing employment rose to its highest level since March 2012.

The survey arrives after consumer and producer prices increased strongly in September, according to the government. The Federal Reserve raised its overnight benchmark interest rate by 25 basis points in September, taking it to the 3.75-per-cent to 4.00-per-cent range.

Economists expect the US central bank to leave borrowing costs unchanged at its meeting next week, then raise them again in December. They also expect the government’s advance gross domestic product report to show growth at around a 3.0-per-cent annualized rate in the July-September quarter.

Purchasing managers’ indexes are considered leading indicators that can point to a turn in the economic cycle. Investors and policymakers watch the Employment Index and Prices Paid Index closely for signals on the labour market and inflation.

The most recent announced reading for the ISM Manufacturing PMI was 54.5, against a forecast of 55.