U.S. business output rose in October, according to Reuters (subscription).
What’s going on: “S&P Global on Tuesday said its flash U.S. Composite Purchasing Managers Index tracking both the manufacturing and service sectors rose to 51.0 in October—one point above the 50 level that separates expansion and contraction—from a final September reading of 50.2. It was the highest level since July.”
- October’s manufacturing PMI exceeded expectations of Reuters-polled economists, who had forecast a reading of 49.5.
- It’s another indication that the economy remains robust, even amid the Federal Reserve’s interest rate hikes aimed at tamping down inflation.
The details: New manufacturing orders increased for the first time in six months and were at their highest in more than a year.
- “On the much-larger services side of the economy, activity also defied forecasts for a modest slowdown as that sector’s PMI came in at a three-month high of 50.9 this month versus 50.1 in September and against a median Reuters poll estimate of 49.8.”
- Cost inputs in the service sector grew at their slowest pace since June 2022.
However … As encouraging as these data are, economists say the recent “flare up in violence in the Middle East presents a downside risk to growth and upside risks to inflation.”