US business activity picks up as future confidence rebounds

The composite PMI increased to 54.3 this month, up from 54.0 in September, signalling a "further solid rise in business activity to mark a robust start to the fourth quarter", S&P Global said.

The survey showed that selling prices rose at their slowest rate since May 2020, as confidence in the future outlook rebounded sharply.

Growth continues to be driven by the services sector, where the business activity index unexpectedly increased to 55.3 from 55.2. Economists had pencilled in a slight slowdown in growth – defined by any number above the neutral 50-point mark – to 55.0.

Meanwhile, the manufacturing sector continued to contract for the third straight month, though the decline eased somewhat, with the PMI rising to 47.8 from 47.3, beating the 47.5 consensus forecast.

Employment over the private sector declined for the third successive month amid uncertainty ahead of November's elections, with the latest polls showing that the battle between former president Donald Trump and vice president Kamala Harris remains too close to call.

However, S&P Global said that confidence in the outlook over the coming year recovered sharply after a steep decline to a 23-month low in September, "as companies anticipated greater stability and certainty post-election". October's optimism hit a 29-month high, with sentiment showing "unusual volatility" as the presidential elections nears.

"The boost to confidence in October was often a reflection of hopes that paused spending and deferred decisions ahead of the election will lift once the political situation is clarified. Prospects of lower inflation, lower interest rates and stronger economic growth in 2025 also helped instil greater confidence," the survey said.