US business activity continued to expand in October, driven by strong demand, while price increases for goods and services slowed to their lowest pace in nearly 4.5 years, according to S&P Global. The Composite PMI Output Index rose to 54.3, indicating solid growth in both the manufacturing and services sectors, up from 54.0 in September. Any reading above 50 signals expansion in the private sector.
This growth momentum is consistent with recent retail sales data, suggesting that US economic growth gained speed in the third quarter, with the Atlanta Federal Reserve estimating a 3.4% annualized GDP growth rate for the quarter.
According to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, the data indicates a strong start to the fourth quarter, with economic activity sustaining the year-to-date upturn. Additionally, the report showed that price pressures eased, with the measure of prices charged by businesses falling to 51.6, the lowest since May 2020.
Consumer resistance to higher prices, driven by trading down and purchasing cheaper substitutes, was confirmed by the Federal Reserve’s Beige Book. Input prices also moderated, signaling that recent inflation spikes may have been temporary.
The report indicated rising demand, with new orders increasing, while employment levels remained stable, with declines in service jobs linked more to non-replacement of leavers rather than layoffs. Manufacturing showed slight improvement, with the PMI edging up to 47.8, and the services sector outperformed expectations at 55.3.
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