Economic Report: U.S. economy revs up as businesses hire more workers — but inflation still a big drag

The numbers: The U.S. economy sped up in early March as Covid-19 restrictions eased and companies were able to hire more people to try to meet pent-up demand, a pair of business surveys show.

The S&P flash U.S. services PMI rose to an eight-month high of 58.9 in March from 56.5 in the prior month.

The flash U.S. manufacturing PMI, meanwhile, climbed to a six-month high of 58.5 from 57.3.

Numbers above 50 signal growth and anything above 55 is seen as exceptional.

The surveys have been rebranded after S&P acquired IHS Markit. The results are based on polls of senior executives in charge of buying supplies for their companies.

Big picture: The so-called flash readings signal an uptick in the U.S. economy in March after as slow start early in the year.

Executives said supply-chain bottlenecks that have contributed to high U.S. inflation grew less severe in March. Businesses were also able to hire more people and boost production.

Companies have plenty of demand. What’s been holding them back are ongoing supply shortages and a tight labor market. Price rose again and executives say inflation is still a big problem.

What remains to be seen is how much the economy is affected by the war in Ukraine or a major coronavirus outbreak in China. Business leaders said the events were “exacerbating supply-chain strain.”

Market reaction: The Dow Jones Industrial Average

nd S&P 500

rose modestly in Thursday trades.

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