- The S&P Global flash US composite index fell 0.8 point to 57.6 in October, data released Friday showed, the second-highest reading since 2022. Figures above 50 indicate expansion, and the manufacturing index inched up to 56, the strongest since May 2022, while a gauge of activity at service providers eased.
- A gauge of selling prices rose at the fastest pace in more than four years, reflecting a sharp rise in the cost of energy, transportation and raw materials. S&P Global’s Chris Williamson said the renewed surge in oil prices is reverberating through to a wide variety of goods and services.
- Demand stayed robust, with new orders posting the fastest growth in 4 1/2 years. Firms responded by hiring, as the composite employment index was the second-highest in four years and the manufacturing index showed factory headcount advancing at the fastest pace since 2012.
- Bottlenecks are getting worse, with supplier delivery times lengthening the most since 2022 on material and labor shortages, overloaded suppliers and shipping delays. Even so, Williamson said that outside the pandemic reopening, US businesses are enjoying their strongest period of growth since 2015.
What Happened?
S&P Global released its flash purchasing managers’ indexes for October on Friday, showing US business activity grew at a slightly slower pace but stayed close to a multi-year high. Strong consumer spending, AI-fueled investment and defense outlays have all bolstered US businesses this year. Williamson said cost pressures remain a key concern as the renewed surge in oil prices feeds through the economy. Looking ahead, forecasters in the latest Bloomberg News survey of economists raised their estimates for private investment growth in the third quarter and across all of 2027.
Why It Matters?
The report pairs strong growth with accelerating price pressure, a mix that makes it harder for the Federal Reserve to justify easier policy. The fastest selling-price gains in more than four years suggest companies are passing higher energy, transport and raw material costs on to customers, which could feed into consumer inflation in the coming months. Longer delivery times point to supply constraints rather than weak demand, a classic sign of an economy running hot. For bond investors, firm hiring and rising prices argue against a quick drop in yields, while for stocks, robust new orders support earnings even as higher input costs threaten margins.
What’s Next?
Investors will watch whether the jump in selling prices shows up in official inflation data and how Fed officials weigh it. Oil remains the swing factor, since Williamson tied the latest cost pressures directly to the renewed surge in oil prices. AI-related investment is expected to keep supporting demand and the broader economy next year. The pace of hiring will also matter, after factory headcount grew at the fastest pace since 2012.
Affected Tickers and Coins: SPY, DIA, XLI, TLT
Source: Bloomberg
