US business activity picked up in October, as the manufacturing sector broke a five-month streak of contraction with a surge in new orders, and services activity accelerated modestly amid signs of easing inflation pressures .
S&P Global reported Tuesday that its preliminary U.S. composite Purchasing Managers’ Index (PMI), which tracks the manufacturing and services sectors, rose to 51.0 in October — one point above the 50 level that separates expansion and contraction — compared to a final data. September reading of 50.2. This is the highest level since July.
It was the latest sign that the U.S. economy is resisting the Federal Reserve’s rate hike to curb inflation. Growth continued throughout the year, although until recently most economists predicted that the Fed’s 5.25 percentage point rate hikes starting in March 2022 would trigger a recession and an increase in unemployment.
Later this week, the Commerce Department will table its results of economic activity for the third quarter, with economists consulted by Reuters estimating that gross domestic product growth was the highest in nearly two years in the period from July to September. S&P Global research suggests this momentum has continued into the start of the fourth quarter.
“Hopes of a soft landing for the U.S. economy will be encouraged by the improvement in the situation seen in October,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a note.
“The S&P Global PMI survey has been among the most pessimistic economic indicators in recent months, so the recovery in U.S. manufacturing growth reported early in the fourth quarter is good news.”
The survey’s manufacturing PMI rose to a breakeven level of 50, the highest since April, halting a slight contraction in the sector that began in May. The average expectation among economists polled by Reuters was 49.5.
New manufacturing orders increased for the first time in six months and were the highest since September 2022.
Even in the services sector, the largest sector of the North American economy, activity has belied predictions of a modest slowdown. The PMI stood at 50.9 this month, its highest level in three months and compared with a median estimate of 49.8 in the Reuters poll.
Source: Terra
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