Business activity in the U.S. Midwest grew a bit more slowly in November but remained strong even as prices paid surged to their highest in 26 years, a report showed on Wednesday.
The National Association of Purchasing Management-Chicago said its business barometer eased to 61.7 this month from 62.9 in October, above Wall Street forecasts centered around 60.0. A reading above 50 denotes growth in the region.
However, the prices paid component of the survey soared to 94.1 from 79.6, stoking fears of inflation.
Data released earlier showed U.S. gross domestic product expanded at a strong 4.3 percent clip in the third quarter, and the Chicago figures suggested growth was also chugging along solidly in the fourth quarter.
But the jump in prices paid unnerved investors because it suggested the need for further interest rate hikes from the Federal Reserve to tamp down inflation pressures.
“It’s certainly a concerning reading,” said Dana Johnson, chief economist at Comerica in Detroit. “Most of what we are seeing there is the impact of higher natural gas and other energy prices.”
Still, inflation numbers have continuously suggested that while energy prices galloped higher over the past year, such increases have yet to permeate lastingly into the economy.
In a sign that the regional labor market had yet to stage a convincing rebound, the Chicago-PMI’s employment component softened to 50.3 from 51.3. New orders fell to 61.6 from 72.6.