Preliminary data released by IHS Markit on Friday revealed that U.S. private sector business activity recorded its record expansion in April.

According to the report, the Markit flash manufacturing purchasing manager's index (PMI) came in at 60.6 in April, up from 59.1 in March. The latest reading pointed to a record expansion in factory activity. Economists had expected the reading to increase to 60.5. A reading above 50 signals an expansion in activity, while a reading below this level signals a contraction. Manufacturers noted a steep increase in output during April, but many firms stated that production capacity was hampered by an inability to source raw materials and inputs in a timely manner. Subsequently, backlogs of work grew markedly. Meanwhile, input costs rose at the sharpest rate since July 2008 due to severe supplier shortages and significant rises in transportation fees.

The Markit flash services purchasing manager's index (PMI) jumped to 63.1 in April, up from 60.4 in the previous month. Economists had expected the reading to grow to 61.9. The rate of expansion was the fastest since data collection for the series began in October 2009, driven by stronger client demand and the reopening of many businesses amid the easing of restrictions. New business growth accelerated notably to the sharpest on record, with total sales supported by a solid advance in new export orders. In line with an improvement in customer demand, the level of outstanding business increased at the steepest rate since September 2020, while the pace of job creation was the fastest since November 2020.

Overall, IHS Markit Flash U.S. Composite PMI Output Index came in at 62.2 in April, up from 59.7 in March, reaching the highest level since data collection began in October 2009.

Chris Williamson, Chief Business Economist at HIS Markit noted: “The US economy is enjoying a strong start to the second quarter, firing on all cylinders as loosening virus restrictions, an impressive vaccine roll-out, a brighter outlook and stimulus measures all helped boost demand.”