Flash PMI: U.S. Business Activity Stays Near a Five-Year High, Factory Hiring Hits Its Fastest Pace Since 2012, but Selling Prices Jump
S&P Global's October flash reading shows a composite of 57.6, with manufacturing at a 53-month high. Its chief economist also warns that prices charged are rising at the fastest rate since August 2022.
Breitbart ran the headline "U.S. Economy Booms as Business Activity, Hiring and New Orders Surge" on Friday, built on S&P Global's October flash purchasing managers' index. We checked the numbers against S&P Global's own release.
The readings. The flash composite index came in at 57.6, down from 58.4 in September, but still the second-highest since March 2022. Anything above 50 means expansion. Manufacturing rose to 56.0 from 55.9, a 53-month high, and S&P calls it the strongest improvement in factory conditions since May 2022. The services business activity index slipped to 57.9 from 58.8.
Orders and hiring. New orders grew at their fastest pace in more than four and a half years, S&P says. Services new business was the strongest since March 2022, and export orders for goods rose for the first time since June of last year. Hiring grew at the second-fastest pace since June 2022, behind only September's. Manufacturing payrolls rose at the fastest rate since March 2012.
What S&P says. "October's flash PMI data indicate that the US economy continues to boom at the start of the fourth quarter," said Chris Williamson, chief business economist at S&P Global Market Intelligence. He said the readings are consistent with GDP growing at about a 5 percent annual rate, after a 4 percent pace signaled for the third quarter. He added that, excluding the post-COVID reopening, recent months are the best growth stretch since early 2015.
The catch. S&P's release carries a warning alongside the good news. It says selling prices rose at the sharpest rate since August 2022, with costs pushed up by the "renewed surge in oil prices," and Williamson said that points to consumer price inflation "likely to rise further above the Fed's target in the coming months." Supply bottlenecks have also worsened and order backlogs are growing.
Note for readers: this is a survey of about 650 manufacturers and 500 service providers, not government data, and flash readings are based on roughly 80 to 90 percent of final responses. A reading above 50 shows direction, not the size of the economy.