S&P Global reported on Tuesday that its flash US Composite Purchasing Managers Index (PMI), which tracks both the manufacturing and service sectors, increased to 51.0 in October, slightly above the 50 barrier that separates growth and expansion, from 50.2 in September.
The Manufacturing PMI rose to 50 from 49.8 in the previous month, while the Services PMI increased to 50.9 from 50.1. Both of these readings exceeded analysts’ expectations. Manufacturing, which has been a weak spot for the US economy last year, is exiting the contraction zone according to this indicator, with the latest reading ticked up to 50.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said “Hopes of a soft landing for the US economy will be encouraged by the improved situation seen in October,” after assessing the survey’s findings.
Meanwhile, economic activity in the eurozone is contracting faster than expected as output falls sharply and demand falters, foreshadowing a downturn in the European bloc, according to figures from a purchasing managers’ survey released on Tuesday.
HCOB’s flash eurozone composite PMI, compiled by S&P Global and regarded as a good indicator of overall economic health, fell to 46.5 in October from 47.2 in September, its lowest since November 2020. The result was lower than the 47.4 reading predicted by economists in a previous Reuters poll, and also below the 50-mark indicating a contraction.
Finally, the private sector in Japan shrank in October for the first time since late 2022, according to S&P Global flash survey findings issued on Tuesday, due to a sharp fall in manufacturing output.
Hopes of a soft landing for the US economy will be encouraged” – Chris Williamson, Chief Business Economist at S&P Global Market Intelligence
In its latest reading, the au Jibun Bank flash Japan manufacturing PMI stayed unchanged at 48.5. The au Jibun Bank flash services PMI also declined further in October to 51.1 in from 53.8 in September, the worst rate of expansion since the beginning of this year.
According to October’s flash PMI report, Japan’s private sector economy ended the eight-month expansion streak that began in January 2023. This was mostly due to a steeper drop in manufacturing, albeit services activity growth also fell to its slowest pace of the year.
Simultaneously, forward-looking indicators pointed to a further slowing of economic momentum in the service sector while manufacturing production is likely to remain in contraction, especially with greater drops in new orders and backlogs reported.
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