“The November PMI surveys provide the first post-election snapshot of the US economy, and makes for very encouraging reading,though stronger economic growth is quite literally coming at a price. “First the good news: business activity across both manufacturing and services rose in November at the strongest rate since March 2015. The upturn reflected a further strengthening of demand,which in turn encouraged firms to take on staff at a rate not previously seen since the survey began in 2009. “However, the surge in demand and hiring has pushed prices and wages higher. Average selling prices for goods and services rose at the fastest rate yet recorded by the survey, with shortages of supplies also more widespread than at any time previously reported. “Firms are scrambling for inputs and workers to meet the recent growth of demand, and to meet rising future workloads. Expectations about the year ahead have surged to the most optimistic for over six years, reflecting the combination of a post-election lift to confidence and encouraging news that vaccines may allow a return to more normal business conditions in the not too distant future.”

There is some input inflation here and that’s going to be a story, even with central bankers taking their eye off the ball. The rise in services costs was the highest in survey history and manufacturers also reported very high input inflation and shortages. There has been a significant rally in the US dollar on this and gold is breaking support.