US firms signal marginal expansion in biz activity in Oct: S&P Global

Manufacturers reported improved activity levels as the downturn in demand moderated. The rise in total output was the quickest for three months. Demand conditions at manufacturers improved for the first time since April, while service providers saw a slower drop in new orders.

The S&P Global flash US manufacturing purchasing managers’ index (PMI) posted 50 this month, up fractionally from 49.8 in September, to signal a stabilisation in operating conditions at manufacturing firms, a company release said.

The headline index was the highest since April, despite indicating no change in the health of the sector on the month. A further improvement in supplier performance and still soft demand conditions led firms to cut their input buying for the fifteenth month running in October.

The rate of decline was the slowest since April, but firms continued to highlight the rundown of safety stocks, with preproduction inventories falling at a faster pace. Stocks of finished goods also fell further. Some reports of labour and material shortages at suppliers led to the least marked improvement in lead times since January in the United States.

Meanwhile, inflationary pressures softened. Cost burdens rose at the slowest pace for three years, with firms moderating hikes in selling prices at the same time. The rate of charge inflation eased to the weakest since June 2020 and was slower than the long-run series average.

Firms were reportedly keen to pass through any cost savings made to customers in a bid to drive sales, S&P Global noted.

At 51 in October, the headline S&P Global flash US PMI composite output index rose from 50.2 at the end of the third quarter to signal a modest uptick in business activity.

Growth in output was the strongest since July, albeit only slight overall. The overall upturn was supported by expansions in activity at manufacturers and service providers at the start of the fourth quarter.

Production at manufacturing firms rose at the quickest pace since April, while output growth at service sector firms was the fastest in three months. Goods producers in particular noted that stronger demand conditions drove the expansion amid a renewed increase in new orders.

Nonetheless, foreign client demand remained subdued in October. With the exception of a fractional rise in July, total new export orders have fallen in each month since June 2022.

October data signalled improved expectations among firms regarding the 12-month outlook for output. The degree of confidence picked up to the joint-highest since May 2022, and was led by greater optimism among service providers.

US businesses continued to hire additional workers during October, albeit at a slightly reduced pace compared to September.

Backlogs of work at firms fell for the sixth month running in October, with the pace of decline easing to the slowest since July.

Following a renewed uptick in inflationary pressures in September, rates of increase in input costs and output charges slowed at the start of the fourth quarter.

Weaker demand for inputs reportedly led suppliers to reduce material prices, therefore relieving some pressure on cost burdens.

Fibre2Fashion News Desk (DS)