US businesses see broad improvement in output expectations in Feb 2023

Expectations strengthened at manufacturers and service providers, with goods producers registering the greatest uptick in optimism regarding the outlook for production. A number of firms noted further reshoring initiatives, with operations being brought to the US to simplify logistics and expand businesses. At the same time, new product development, expectations of softer inflationary pressures, and hopes of improved candidate availability for open roles were mentioned as potential drivers of growth in the coming 12 months, according to the S&P Global US Business Outlook survey.

Nonetheless, threats to growth remained apparent. Private sector firms continued to highlight the pressure inflation has on customer spending which could extend further into 2023. A shortage of labour and the increased cost of wages were also stated as factors that could limit growth, with firms also noting that competition for workers remained strong. Some companies also suggested that supply chain instability continued to be a concern.

Private sector firms in the US expected strong increases in staff and non-staff costs over the coming year in February. Although both manufacturing and services companies anticipate softer upticks in cost burdens, rates of inflation were set to remain marked. The net balances of firms that foresee increases in staff and non-staff costs dipped to the lowest since June 2021, but the figures remained well above their respective averages. Moreover, the net balance of companies that anticipated higher wage bills at 44 per cent was higher than the global average at 40 per cent.

Although the net balance of companies expecting a rise in output prices fell to the lowest for two years in February, firms were still strongly confident of an uptick in charges. The net balance of firms expecting higher selling prices was also above the global average, and among the highest of the 12 countries for which comparable data is available.

Fibre2Fashion News Desk (NB)