Private sector economic activity provisionally picked up further momentum this month according to the latest PMI survey. At 57.4, April's flash composite output index was up 0.6 points versus its final March reading to comfortably beat market expectations and register its strongest level in seventy-one months.
Moreover, the headline improvement reflected gains in both the manufacturing and service sectors. Hence, the flash PMI for the former gained nearly 2 points to 55.1, a 6-year peak, while the latter edged 0.2 points firmer to 57.7, a 71-month high.
Aggregate new business posted its sharpest increase since May 2011 and backlogs rose for a fourteenth consecutive month. Headcount climbed in both sectors and combined, saw its largest advance in sixty-eight months. Against this backdrop, business confidence in the year ahead moved up to a new series high with no obvious negative impact from the upcoming presidential election.
Inflation developments were also positive. Input cost inflation remained on a solid uptrend, recording its strongest reading in seventy months. More significantly, selling prices increased for the first time in some five years as manufacturers deemed market conditions firm enough to raise factory gate charges.
The preliminary April PMI results are surprisingly good and the narrowing in the performance gap between the manufacturing sector and its services counterpart is particularly welcome. Recent months have seen some disconnect between the survey's findings and the hard data but this report would certainly seem to suggest a very good start to the second quarter.