Business activity accelerated in October, reversing a downward trend many economists had expected to continue.
S&P Global’s flash US composite PMI for October, which captures activity in both the services and manufacturing sectors, came in at 51 in October, up from 50.2 in September and better than the 50 that had been expected by economists.
“Hopes of a soft landing for the US economy will be encouraged by the improved situation seen in October,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in the release. “The S&P Global PMI survey has been among the most downbeat economic indicators in recent months, so the upturn in US output growth signaled at the start of the fourth quarter is good news.”
The October update comes as investors continue to debate whether the Federal Reserve’s interest rate hiking campaign will drive the US into recession. As Williamson noted, Tuesday’s data favors a scenario where the economy manages to squeak out minimal growth while inflation decreases.
The release noted that some service providers indicated “high interest rates and challenging economic conditions” impacted client demand. But in other areas, the economy showed signs of growth.
The US manufacturing PMI improved to a reading above 50, considered a sign of expansion. S&P Global noted in the release that October marked the first time manufacturing demand picked up in six months.
And, importantly, the long-term outlook for business participants has picked up too. Service providers are now the most confident they’ve been about the next 12 months since May 2022.
“Future output expectations have also turned up despite rising geopolitical concerns and domestic political tensions,” Williamson wrote in the release.
