US business activity stable in March; inflation picks up

WASHINGTON (Reuters) – U.S. business activity held steady in March, but prices increased across the board, suggesting that inflation could remain elevated after picking up at the start of the year.

S&P Global said on Thursday that its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, dipped to 52.2 this month from 52.5 in February. A reading above 50 indicates expansion in the private sector.

The modest slowdown reflected a further cooling in services sector activity. Manufacturing climbed to a 21-month high. The survey suggested that the economy ended the first quarter on solid ground, though the pace of growth probably slowed from the October-December quarter’s 3.2% annualized rate.

The United States continues to outperform its global peers, despite 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022 to quell inflation.

The U.S. central bank on Wednesday left its policy rate unchanged at the current 5.25%-5.50% range, but policymakers indicated they still expected to reduce it by three-quarters of a percentage point by the end of this year.

The S&P Global survey’s measure of new orders received by private businesses slipped to 52.1 from 52.3 in February. Its measure of prices paid for inputs increased to a six-month high of 58.9 from 55.5 in February. The output prices gauge rose to 56.8, the highest reading since April 2023, from 54.1 in February. Much of the price increases were in services.

With goods disinflation likely drawing to an end, the increase in services prices will need to slow considerably to keep overall inflation on a downward trajectory.

This month’s increase in both input and output prices hinted at further rises in inflation in the coming months. Consumer prices have risen strongly in the first two months of 2024.

“Costs have increased on the back of further wage growth and rising fuel prices, pushing overall selling price inflation for goods and services up to its highest for nearly a year,” said Chris Williamson, chief business economist at S&P Global Market Intelligence. “The steep jump in prices from the recent low seen in January hints at unwelcome upward pressure on consumer prices in the coming months.”

Manufacturing expanded further, with the survey’s flash manufacturing PMI edging up to 52.5 this month, the highest reading since June 2022, from 52.2 in February.

Growth in new orders slowed, but employment increased and

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UK Business Activity Expands for Fifth Month in Sign of Recovery

(Bloomberg) — Britain’s private sector firms continued to report output growth, adding to evidence that a rebound from last year’s recession is underway.

S&P Global said its composite purchasing managers’ index registered 52.9 in March, a marginal decline from 53 in February. It was lower than the reading expected by economists but above the crucial threshold of 50 signaling growth for a fifth month.

The figures are the latest indication that the UK economy is growing moderately again after a mild recession last year. But they also indicated persistent inflationary pressures that the Bank of England is seeking to curtail, holding interest rates at a 16-year high.

“A further robust expansion of business activity ended the economy’s best quarter since the second quarter of last year,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a report Thursday. The PMI reading suggests UK GDP is on track for a 0.25% rise in the first quarter, he added.

What Bloomberg Economics Says …

“The British recession is over. That’s the takeaway from the latest composite PMI survey despite a slight retreat in March. Still, the tiny dip in the composite PMI is a reminder that the outlook remains fragile. We expect growth to remain subdued in 2024.”

—Niraj Shah, Bloomberg Economics. Click for the REACT.

Economists and investors expect the BOE to keep the key rate at 5.25% when the latest decision is announced at 12 p.m. in London. The PMIs were little changed from a month ago, suggesting the economy is evolving about the way the central bank forecast last month.

S&P said manufacturing output rose slightly for the first time since February 2023. The expansion in services activity softened due to lower demand from households feeling the squeeze from the cost-of-living crisis.

While services providers posted a drop in confidence, optimism in the manufacturing sector hit the highest since April 2023. Businesses are expecting higher sales over the year thanks to citied improving consumer confidence, easing inflation and the prospect of rate cuts in 2024.

Inflation remains a concern for businesses reporting spiking input costs. Higher wage pressures impacted the services sector, while manufacturing businesses faced increases in freight costs and commodity prices.

“Stubbornly sticky service sector inflation has persisted into March, exacerbated by renewed inflation in the manufacturing sector,” Williamson said. “March’s PMI warns of elevated underlying price pressures which will likely add to calls

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What defines an Indigenous business? A guide aims to weed out fronts and frauds

A coalition of Indigenous economic organizations wants the federal government to adopt new definitions of what constitutes Indigenous businesses and organizations into its procurement process.

“We know that there are shell companies that maybe have an Indigenous front person that’s being used really to access a lot of set-asides and procurement opportunities,” said Dawn Madahbee Leach, chair of the National Indigenous Economic Development Board and a member of the National Indigenous Procurement Working Group.

The new Indigenous Business Definitions were released by the National Aboriginal Capital Corporations Association (NACCA) last week and developed by the National Indigenous Procurement Working Group, which consists of representatives of various Indigenous organizations, government departments, and industry associations.

In 2021, the federal government announced a government-wide procurement target of five per cent for Indigenous businesses. The federal government’s Indigenous Business Directory includes a list of Indigenous companies eligible for special consideration when bidding on some federal contracts.

The new guide provides criteria for Indigenous sole proprietorships, corporations, non-profits, charitable organizations, co-operatives, and partnerships.

Dawn Madahbee Leach is chair of the National Indigenous Economic Development Board and a member of the National Indigenous Procurement Working Group. (Submitted by Dawn Madahbee Leach)

Some of the criteria are similar to what is used by the federal government, such as requiring 51 per cent ownership and control by Indigenous people, while other definitions are tougher, said Madahbee Leach.

She hopes the definitions will help weed out businesses that aren’t Indigenous-led, false claims of Indigeneity and tokenism from opportunities meant for First Nations, Métis and Inuit.

“It’s going to make a difference to ensure that those set-asides that are meant for our people go to our people,” said Madahbee Leach.

“There’s so much opportunities to involve our people in Canada’s economy and procurement is one of the best ways.”

NACCA’s criteria for proof of Indigeneity excludes membership in some organizations the federal government’s Indigenous Business Directory criteria includes.

“We’ve contested that directory and we said we need to maintain it because we know how to determine Indigeneity way better than, you know, a civil servant,” said Madahbee Leach.

Controls versus barriers

The Canadian Council for Aboriginal Business, which was part of the working group that developed the definitions, said it has concerns about the criteria around joint ventures and partnerships, and that the definitions require further work.

The guide’s criteria include agreements that define the Indigenous partner as “having the

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Retailers are cutting prices to win your business. Here’s where you can save – National

Canadians with extra spending cash right now might find they can score deals on clothing, some discretionary items and higher-ticket purchases as experts say retailers are fighting harder for consumers’ dollars.

February’s inflation report released Tuesday shows that not only is the pace of price hikes cooling across a range of household expenses, but some products are even seeing costs decline year over year, offering consumers much-needed relief in some categories.

The clothing and footwear component of Statistics Canada’s consumer price index saw a 4.2 per cent decline year over year last month, steeper than the 1.3 per cent drop seen in January. The section including household furnishings also saw annual price declines accelerate in February.


Click to play video: 'Canada’s inflation rate slowed to 2.8% in February, beating expectations for 2nd consecutive month'


Canada’s inflation rate slowed to 2.8% in February, beating expectations for 2nd consecutive month


Shelly Kaushik, economist with BMO, said in a note to clients on Wednesday that “it’s clear prices for discretionary goods are falling” in Canada.

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She highlighted that jewelry prices saw the biggest drop on record in non-seasonally adjusted terms last month. While she noted that an increase in the supply of lab-grown diamonds or alternative stones could have driven prices lower for sweethearts shopping over Valentine’s Day, the simpler explanation is that the Bank of Canada’s interest rate hikes are working well to tamp down price pressures in this area.

“Consumers are pulling back on non-essential items amid elevated rates, pushing the prices of those items down. Monetary policy in action,” she said.

Retail analyst Bruce Winder tells Global News the softening economy is indeed hampering consumer spending demand, which is forcing many retailers to drop prices to make sales.

“There is discounting that’s happening right now, because retail is all about supply and demand,” he says.

Discretionary items like jewelry and clothing and higher-ticket durable goods like electronics, furniture and appliances are “softer right now” because higher interest rates are forcing households to spend more on shelter costs, Winder says.

While food inflation cooled significantly in February, the cumulative impact of price hikes over the past few years means grocery bills are still eating up a big chunk of Canadians’ budgets, he adds.

“It’s still expensive out there. So consumers have had to make trade-offs,” he says.

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And retailers are taking notice of their cash-strapped customers.


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Windsor business delinquencies rising faster than national rate

Published Mar 21, 2024  •  Last updated 6 hours ago  •  3 minute read

Windsor-Essex businesses have been particularly hard-hit by the pandemic and its aftermath. A shuttered business on Ouellette Avenue in Windsor is shown on Tuesday, March 19, 2024. Photo by Dan Janisse /Windsor Star

Despite optimism seen on the near-horizon, Windsor area businesses appear to have been hit harder, on average, than elsewhere in Ontario or Canada, according to new figures.

An Equifax Canada Market Pulse Quarterly Business Trends report released this week shows business delinquencies on credit/loan payments rose at a faster rate in Windsor-Essex than the national and provincial averages in 2023.

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“I didn’t expect us to be higher than the Canadian average,” said Windsor-Essex Regional Chamber of Commerce CEO Rakesh Naidu.

“It’s a sign businesses are struggling.

“This has been a period of pain longer than

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