WASHINGTON—U.S. manufacturing activity surged to its highest level in nearly 14 years in early January, but bottlenecks in the supply chain caused by the COVID-19 pandemic are driving up prices and signaling a rise in inflation in the months ahead. Other data on Friday showed an unexpected increase in sales of previously owned homes in December. Manufacturing and the housing market are helping to anchor the economy, which is being battered by a wave of coronavirus infections. But the pandemic is causing labor shortages at construction sites and factories, which could erode some of the strength in the manufacturing and housing sectors. Data firm IHS Markit said its flash U.S. manufacturing PMI accelerated to a reading of 59.1 in the first half of this month, the highest since May 2007, from 57.1 in December. Economists had forecast the index would slip to 56.5 in early January. A reading above 50 …