US manufacturing and UK data re-ignite inflation concerns

The US economic data yesterday were mixed. Reuters reports that auto sales stalled in April but there were some signs of strength among other data.

The Institute for Supply Management said its index of national factory activity rose to 54.7 in April from 50.9 in May, above the median forecast of 51.0 among analysts polled by Reuters. The reading was the highest since May 2006...

The National Association of Realtors said its gauge of pending sales of existing U.S. homes fell 4.9 percent to 104.3 in March, its lowest in four years. That compares with an upwardly adjusted reading of 109.7 in February.

The ISM data do look strong. Quite clearly, the downtrends in the indices have been arrested, at least for the time being, although this also means inflation remains a concern.

	Nov	Dec	Jan	Feb	Mar	Apr
PMI	49.9	51.4	49.3	52.3	50.9	54.7
New orders	49.7	51.9	50.3	54.9	51.6	58.5
Production	49.3	52.4	49.6	54.1	53.0	57.3
Employment	48.9	49.4	49.5	51.1	48.7	53.1
Prices	53.5	47.5	53.0	59.0	65.5	73.0

Inflation is also a concern in the UK, which is showing few signs of cooling.

Reuters reports that the Chartered Institute of Purchasing and Supply/Royal Bank of Scotland Purchasing Managers' Index slipped to 53.9 in April from 54.2 in March but the output prices index rose to 56.8 in April, near a record high hit in February, while the input prices index hit 63.2, its highest level since October. In addition, a survey from the Confederation of British Industry showed yesterday that retail sales volumes rose at their fastest pace in three years in April.