News & Insights

The S&P Global Flash U.S. Manufacturing PMI rose from 52.0 to 52.2 in October, a two-month high. This continues the trend in business conditions with nine of the past 10 months signaling growth. Factory production grew for the fifth consecutive month, while new orders increased at the steepest pace in one-and-a-half years, driven by the domestic market. On the other hand, export orders for manufactured goods fell at the fastest rate since February, with sales to China and Europe falling.

Inventories continued to grow, but only marginally, as declining backlogs caused manufacturers to reduce input buying in October. Meanwhile, supplier delivery times shortened compared to September. Manufacturers’ input cost inflation increased at the slowest pace since February but remained incredibly high and continued to be attributed to tariffs. Selling prices for goods accelerated in October but stayed below rates seen in the preceding six months. Firms continued to report difficulties passing higher costs on to customers due to suppressed demand and increased competition.

Overall business activity advanced to a three-month high, increasing from 53.9 in September to 54.8 in October. This reading is accompanied by the largest rise in new business seen in 2025, with both the service sector and manufacturing experiencing growth in business activity in October. Overall, new order growth rose at the steepest level so far this year despite service exports falling. Despite price increases in manufacturing, service sector inflation eased in October.

Meanwhile, optimism about future business conditions fell in October, amid continued uncertainty around trade policy and the ongoing federal government shutdown. Manufacturing optimism declined to the second lowest level since June 2024 despite continued hope that tariffs could stimulate domestic production in the coming year.