After a significant slowdown in March, the American economy is starting to regain momentum. The business activity index (PMI) rose to 52 from 50.3, signaling a return to growth.
Industry is primarily responsible for the improvement. Production accelerated to its highest level in almost four years, showing that companies have started to operate more intensively despite the difficult environment.
The US economy is rebounding after a weaker March.
The industry is going up
The manufacturing sector proved crucial to the rebound. Companies increased production and orders, partly because they began stockpiling fears of supply problems and rising prices.
This is the so-called “pre-emptive action” – companies are trying to protect themselves for the future before the situation worsens even further, as Reuters writes.
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The war with Iran drives up prices
The conflict in the Middle East remains the biggest problem. The war with Iran has disrupted transport through the strategic Strait of Hormuz, which directly affects global supplies of oil and other raw materials.
The effect is simple: prices rise.
Production costs have reached their highest level in many months, and companies are increasingly passing these increases on to customers. Price indices show fastest growth since mid-2022.
Delivery problems are back
Logistical disruptions are becoming a serious problem again.
Deliveries are taking longer and companies are reporting difficulties with the availability of raw materials. This is the result of both the war and increased demand for safety stocks.
The situation is starting to resemble moments from the times of the pandemic – congestion and nervous “buying in advance”writes Reuters.
Labor market without significant improvement
Despite a rebound in economic activity, employment is growing very slowly.
Companies are cautious – on the one hand, they do not want to lay off workers, but on the other, they avoid increasing employment. Uncertainty related to costs and the geopolitical situation effectively inhibits personnel decisions. We previously wrote about the latest data from the labor market in Business Insider Polska.
