U.S. business activity weakens again in October: S&P global survey

Oct 24 (Reuters) – U.S. business activity contracted for a fourth straight month in October, with manufacturers and service firms reporting weak customer demand in monthly surveys of purchasing managers, the latest evidence in the face of high inflation and a weakening economy . Interest rates rise.

S&P Global said on Monday that the U.S. Composite PMI output index, which tracks manufacturing and services, fell to 47.3 this month from a final reading of 49.5 in September.

A reading below 50 indicates a contraction in the private sector. Outside of the slump during the first wave of the COVID-19 pandemic in spring 2020, business output is falling at the fastest pace since the 2007-2009 global financial crisis, at least by S&P Global’s measures.

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“The U.S. economic downturn gathered notable momentum in October, while confidence in the outlook deteriorated sharply,” S&P chief business economist Chris Williamson said in a statement. “The decline was driven by higher living costs and financial Service activity declined due to tighter conditions.”

But the S&P Global survey may have exaggerated the slowdown. Manufacturing and services continued to expand in September, the Institute for Supply Management’s competitor survey showed.

Although gross domestic product contracted in the first and second quarters, the revenue side of the growth ledger showed the economy grew at a moderate pace during the period, and the overall expansion could resume in the third quarter. Economists polled by Reuters had estimates for the Commerce Department’s first reading of third-quarter gross domestic product, due on Thursday, for an annual growth rate of 0.8% to 3.7%, with a median estimate of 2.4%.

That said, the economy is slowing as the Fed aggressively tightens monetary policy to cool demand and bring inflation back to the Fed’s 2% target.

The Fed announced a 75 basis point rate hike in September, the third straight hike of that size, and is expected to reach a quarter of that rate at next week’s policy meeting, although the degree of aggressiveness from policymakers has since been seen as One of the issues that will be discussed in November. 1-2 sessions.

The Rapid Composite New Orders Index slipped to 49.0 from a final reading of 50.9 in September.

The survey’s measure of prices paid by businesses for inputs edged up to 67.8 from a low of 67.3 since January 2021, reflecting an uneven pace of easing supply bottlenecks. Companies also aren’t raising prices on their products as they did earlier this year, in part because of slowing demand.

The survey’s preliminary manufacturing purchasing managers’ index fell to 49.9 this month from 52.0 in September, the first contraction reading since June 2020. Economists polled by Reuters had forecast the index slipping to 51.0. New orders fell sharply to their lowest level since the spring 2020 COVID lockdown.

The survey’s PMI for the quick service sector fell to 46.6 from 49.3 in September. The services sector reported that input prices and tariffs edged up in October after declining steadily since late spring, reflecting the uneven pace of easing inflationary pressures.

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Reporting by Dan Burns; Editing by Andrea Ritchie

Our Standard: The Thomson Reuters Trust Principles.

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