The numbers: The U.S. economy accelerated in February as omicron waned and government restrictions were lifted, a pair of surveys showed, but businesses increases prices at the fastest pace on record as inflation got worse.
A “flash” index of service-oriented companies jumped to 57.5 this month from an 18-month low of 51.1 in January, IHS Markit said.
A similar gauge of manufacturers rose to 52.5 in February from 50.5.
The flash IHS surveys offer the first broad look at the performance of the U.S. economy in each month. Any reading above 50 means businesses are growing and numbers above 55% are quite healthy.
Big picture: The economy suffered a blow at the start of 2022 as omicron exploded across the country, but the virus is receding now and governments are dropping restrictions on business such as vaccine mandates. That’s giving a lift to the economy.
Persistent labor and supply shortages remain a drag on the economy, however, and they are adding to the worst bout of U.S. inflation in 40 years. Some executives say the problems eased slight in February, but they are still a big problem.
Key details: Service-oriented companies and manufacturers alike boosted production in February to keep up with strong sales. Many companies were also trying to hire.
Yet businesses were still coping with broad shortages of labor and supplies tied to ongoing disruptions from the pandemic. And the average prices that companies charge for their goods and services posted a record increase this month.
Looking ahead: “The pace of economic growth accelerated sharply in February as virus containment measures, tightened to fight the omicron wave, were scaled back,” said Chris Williamson, chief business economist at IHS Markit.
“Demand was reported to have revived and supply constraints, both in terms of component availability and staff shortages, moderated.”
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
fell sharply in Tuesday trades after Russia invaded part of eastern Ukraine.