The American economy continued to boom in October, with business activity expanding at one of the fastest rates in more than four years, manufacturing conditions reaching their strongest level since 2022, and factory hiring accelerating to its fastest pace in nearly 15 years.
The S&P Global flash U.S. Composite Purchasing Managers' Index came in at 57.6 in October, down slightly from September's 58.4 but still the second-highest reading since March 2022. Readings above 50 indicate expansion, with higher numbers signaling more widespread growth.
The survey pointed to vigorous growth across both manufacturing and services, supported by strong domestic demand, rising exports, and an acceleration in new orders.
"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.
Williamson said the survey results were consistent with gross domestic product expanding at a 5 percent annualized rate in the fourth quarter, following an estimated 4 percent expansion in the third quarter.
Excluding the reopening of the economy following the pandemic, recent months have produced the strongest sustained period of business growth since early 2015, according to S&P Global.
Manufacturing Expansion Reaches Four-Year High
The manufacturing sector delivered one of the report's strongest performances.
The S&P Global Manufacturing PMI rose to 56.0 in October from 55.9 in September, reaching its highest level in 53 months. The reading marked the strongest improvement in manufacturing business conditions since May 2022.
Factory production continued to expand rapidly, with the manufacturing output index registering 55.8, down modestly from 56.2 in September. New orders also continued growing at a strong pace, although slightly more slowly than in the previous month.
Manufacturing employment accelerated to its fastest rate since March 2012, suggesting factories are expanding payrolls to meet rising demand and increase production capacity.
Manufacturers also reported increased purchases of materials and rising inventories, with stocks of inputs growing at their fastest pace in four months.
Business confidence in the manufacturing sector improved markedly, returning close to its long-term average as companies expressed greater optimism about future demand and economic conditions.
The services sector also continued expanding rapidly. The flash Services PMI Business Activity Index registered 57.9 in October, compared with 58.8 in September. Despite the modest decline, the reading remained among the strongest of the past five years.
New Orders and Hiring Surge
One of the clearest indications of continued economic momentum came from new orders, which grew at their fastest pace in more than four and a half years.
Services companies reported their strongest increase in new business since March 2022. Manufacturing orders also continued expanding at a robust rate.
The growth in demand was accompanied by a sharp increase in unfinished work. Backlogs of orders accumulated at their fastest pace since May 2022, suggesting that businesses are receiving more orders than they can immediately fulfill.
Companies responded by increasing hiring.
Employment across manufacturing and services rose at the second-fastest pace since June 2022, surpassed only by September's increase. Manufacturing payroll growth reached its strongest level since March 2012, while services employment recorded its third-largest increase in more than four years.
The hiring gains suggest that businesses are expanding their workforces to accommodate growing demand rather than expecting the current expansion to fade quickly.
The report also showed that demand from overseas customers is strengthening.
Export orders increased at their fastest pace since May 2022. Manufacturers reported their first increase in export orders since June 2025, while services firms recorded their strongest export growth since July 2023.
The improvement in foreign sales suggests that international demand is beginning to reinforce an expansion that has been driven primarily by American consumers and businesses.
Growth Remains Strong Despite Rising Costs
The survey also showed that businesses are facing increased costs as economic activity accelerates.
Selling prices across manufacturing and services rose at their fastest pace since August 2022. Companies cited higher energy and transportation costs, rising raw-material prices, and increased wages and other operating expenses.
Strong demand and growing backlogs have made it easier for businesses to pass those costs along to customers.
Supply chains also showed signs of strain as manufacturers reported lengthening delivery times, shortages of materials, and growing pressure on suppliers.
Despite those challenges, business expectations for output over the coming year remained near their highest levels of 2026. Manufacturing optimism strengthened significantly, although confidence among services firms eased somewhat from September.
Source link
