US business activity growth accelerated in October to the second-fastest so far this year, according to early ‘flash’ PMI data, accompanied by the largest rise in new business seen in 2025 to date.
Improvements in output and new work were recorded in manufacturing and services, though both sectors signaled falling exports. Factories also reported falling input buying amid a steep drop in backlogs of work and an unprecedented build-up of unsold stock.
Meanwhile, while employment growth picked up, the pace of job creation remained only modest, and weakened especially in manufacturing. Jobs growth was also limited by a worsening of business confidence, principally reflecting ongoing concerns over the impact of government policies such as tariffs.
Sentiment was supported, however, by lower interest rates. Prices charged for goods and services rose at the slowest rate since April, but firms’ costs continued to increase sharply, attributed to the impact of tariffs alongside upward wage pressures.
The headline S&P Global US PMI Composite Output Index rose from 53.9 in September to 54.8 in October, according to the 'flash' reading. The latest reading is the highest since July and signals an acceleration of growth to a pace just above the third quarter average. Output has now risen continually for 33 months.
The service sector continued to report especially robust growth, posting the fastest expansion since July and the second-strongest increase so far this year. Inflows of new orders for services likewise improved, rising at the steepest rate seen in 2025 to date. While service providers reported signs of improving domestic demand, exports of services fell back into decline after modest growth in September.
Higher output was also reported in manufacturing, where production volumes rose for a fifth consecutive month.
Employment rose for the tenth time in the past 11 months, with the rate of job creation improving on September’s recent low and broadly in line with the average for the year to date.
The S&P Global US Manufacturing PMI rose from 52.0 in September to 52.2 signaling an improvement of factory business conditions for the ninth time in the past ten months (July saw a marginal deterioration). Production and new orders growth both accelerated, the latter notably signaling the sharpest improvement in demand for 20 months.
However, employment growth weakened to a three-month low. While inventories of inputs also rose, the gain was only marginal. The suppliers’ delivery times index also acted as a reduced positive influence on the headline PMI higher, via a reduced lengthening of lead times compared to September.