WASHINGTON (Reuters) – U.S. business activity rose in October on strong demand, with companies raising prices for goods and services at the slowest pace in nearly 4 1/2 years and the economy getting off to a solid start to the fourth quarter. I showed that I did it.
S&P Global on Thursday announced that the preliminary U.S. Composite PMI Production Index, which tracks the manufacturing and services sectors, was 54.3 this month, up from September’s final reading of 54.0. A number above 50 indicates private sector expansion. Retail sales data suggests economic growth further accelerated in the third quarter.
The Atlanta Fed currently estimates gross domestic product grew at an annualized rate of 3.4% last quarter. The economic growth rate for the April-June period was 3.0%. The government is scheduled to release preliminary estimates of third-quarter GDP next Wednesday.
“Business activity continued to grow at an encouraging and solid pace in October, extending the economic upturn recorded from the start of the year into the fourth quarter,” said Chris Williamson, chief business economist at S&P Global Market Intelligence. ” he said.
The average price businesses charged for goods and services in the survey was 51.6, down from 54.6 in September and the lowest since May 2020. Consumers fed up with inflation are resisting price increases by lowering prices or buying cheaper alternatives.
This was also supported by the Federal Reserve’s Beige Book on Wednesday, which said that reports on consumer spending in early October were mixed, with “changes in the mix of purchases primarily to cheaper alternatives in some quarters.” has been pointed out.”
An indicator of prices paid by businesses for inputs fell to 58.1 from 58.8 in the previous month.
Both indicators were moderate, suggesting that the improvement in consumer prices in September was likely to be temporary.
Economists expect inflation to continue to subside to the Fed’s 2% target. The U.S. central bank began its easing cycle last month with an unusually large 0.5 percentage point cut in its policy interest rate to a range of 4.75% to 5.00% amid growing concerns about the labor market. The Fed has raised interest rates by 525 basis points in 2022 and 2023 to curb inflation.
Demand is recovering as price pressures ease. The index of new orders for private companies according to the survey rose to 54.2 from 52.5 in September.
Although employment levels remain weak, S&P Global said the decline in services jobs is “often related to the failure to replace retirees rather than layoffs.”
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The flash manufacturing PMI according to this survey was 47.8, slightly up from 47.3 in the previous month. Economists polled by Reuters had expected the sector, which accounts for 10.3% of the economy, to fall to 47.5.
The company’s flash services PMI came in at 55.3, up from 55.2 in September and above economists’ expectations of 55.0.
(Reporting by Lucia Muticani; Editing by Chizu Nomiyama)
