Preliminary data released by IHS Markit on Wednesday revealed that U.S. private sector business activity demonstrated a further marked expansion in early June.

According to the report, the Markit flash manufacturing purchasing manager's index (PMI) came in at 62.6 in June, up from 62.1 in May. The latest reading pointed to a record expansion in factory activity. Economists had expected the reading to decrease to 61.5. A reading above 50 signals an expansion in activity, while a reading below this level signals a contraction. Rates of output and new order growth remained well above their respective series averages, although supplier delays and difficulties finding suitable workers led to a softer increase in production among manufacturers. Average supplier delivery times lengthened to the highest extent on record by some margin, while employment growth slowed, as firms struggled to find staff or entice workers back to employment. On the price front, the rate of input cost inflation accelerated to a fresh series record amid broad-based raw material price hikes. Firms increased their selling prices at a quicker rate in an effort to pass on these higher costs, with charge inflation also surpassing all previous records.

The Markit flash services purchasing manager's index (PMI) dropped to 64.8 in June, down from the record 70.4 in the previous month. Economists had expected the reading to slip to 70.0. Thus, the rate of expansion was the second-sharpest since data collection for the series began in October 2009, supported by further upturns in customer demand as pandemic conditions eased further during the month. New business and new export order continued to demonstrate strong growth, while the rate of job creation was the slowest for three months, as struggles among companies to find suitable workers hampered employment growth. At the same time, wage costs and additional transportation fees pushed up cost burdens, which grew at the second-fastest pace on record. Similarly, output prices increase markedly as firms sought to pass on greater input costs to clients.

Overall, IHS Markit Flash U.S. Composite PMI Output Index came in at 63.9 in June, down from 68.7 in May, but nonetheless signaling a historically elevated rate of growth in output across the private sector.

“The early PMI indicators point to further impressive growth of the US economy in June, rounding off an unprecedented growth spurt over the second quarter as a whole,” noted Chris Williamson, Chief Business Economist at HIS Markit. “While both output growth and inflows of new orders have come off their peaks in both manufacturing and services, this is as much due to capacity constraints limiting firms’ abilities to cope with demand rather than any cooling of the economy,” he added.