Economic Report: U.S. economy grew rapidly in November, Markit surveys show, but shortages persist
U.S. businesses grew rapidly in November, but they are still being hampered by ongoing labor and supply shortages that are feeding the biggest burst of inflation in 31 years and constraining an economic recovery.
A pair of surveys by IHS Markit showed the economy expanding this month at an acclerated pace. Yet the U.S. could be growing even faster if businesses could get all the labor and supplies they needed.
The so-called flash survey of U.S. manufacturers rose to a two-month high of 59.1 in November from 58.4 in the prior month.
A similar flash survey of service-oriented companies — banks, retailers, restaurants and so forth — slid to a two-month low of 57 from 58.7.
Any number above 50 signals expansion and figures above 55 are seen as exceptional.
Although companies reported higher demand, they can’t find enough labor or get materials on time to meet the needs of their customers. They’ve boosted wages and are paying higher prices for supplies, contributing to the biggest surge in U.S. inflation since 1990.
“The US economy continues to run hot,” said Chris Williamson, chief business economist at IHS Markit. “Growth remains above the survey’s long-run pre-pandemic average as companies continue to focus on boosting capacity to meet rising demand.”
“However, the slowdown underscores how the economy is struggling to cope with ongoing supply constraints,” he added.
The Federal Reserve is under pressure to rein in inflation and the central bank is moving to reduce stimulus for the economy. Yet analysts say it could take a year or more before inflation recedes from its current 6.2% yearly rate back to the Fed’s 2% goal.
It’s unclear when labor shortages will end. Millions of people who had jobs before the pandemic are no longer in the workforce. Some studies suggest an unusually large number of people retired and they might not be coming back.