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U.S. business confidence highest in over three-and-a-half years

Staff Writer |
The latest IHS Markit Business Outlook survey indicates a stronger degree of confidence towards expectations for business activity growth in the coming year in the U.S.

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The latest net balance signalled that +41% of companies foresee a rise in business activity, the highest reading in over three-and-a-half years.

Increased optimism is largely linked to new product development and greater client demand.

Positive sentiment is also influenced by higher levels of new business and increased opportunities stemming from more favourable economic conditions.

Even so, firms note concerns regarding purchasing price pressures, supply chain delays and greater competition.

Goods producers and service sector firms both forecast a rise in new business over the coming 12 months.

That said, service providers signal an increase in confidence towards new orders whereas manufacturers expect a weaker expansion in the coming year.

More favourable economic conditions and greater client demand are largely responsible for the joint-highest level of positive sentiment since February 2014.

Stronger business expectations towards business activity and new orders are driving a greater sense of confidence surrounding future revenues and employment.

More positive forecasts regarding hiring plans among US firms largely stem from reports of increases in client demand and new business.

Furthermore, the net balance is +24%, the highest since February 2014.

At the sector level, service sector firms indicate a rise in confidence towards employment growth.

In contrast, goods producers are less optimistic than in October.

U.S. companies are also slightly more positive in regards to their expectations for capital investment in February.

Moreover, the net balance (+10%) is the second-strongest in four years.

Private sector firms across the U.S. forecast a quicker rise in cost burdens over the coming year, with the net balance (+21%) rising strongly from that seen in October to the highest since June 2013.

That said, inflation expectations remain below the global average.

Companies in the U.S. also foresee a stronger increase in prices charged over the next 12 months, with the net balance rising to the highest since October 2015.


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