US October PMI Shows Manufacturing at 53-Month High as Inflation Pressures Mount and Consumer Sentiment Stays Near Record Lows

S&P Global's October flash PMI readings released October 23 showed the US economy expanding at a robust pace, with manufacturing leading the way. The manufacturing PMI rose to 56.0, beating the 55.5 estimate and the prior 55.9 reading to reach a 53-month high. The services PMI eased slightly to 57.9, just under the 58.0 forecast and September's 58.8. The composite PMI landed exactly at the 57.6 consensus, down from 58.4 in September but still consistent with annualized GDP growth of roughly 5%, according to S&P Global.

The headline growth figures came paired with a notable inflation warning. Selling prices in October rose at their fastest pace since August 2022, and hiring remained strong across sectors. The combination of resilient expansion and accelerating prices complicates the Federal Reserve's rate path, giving policymakers less justification to ease and raising the stakes for upcoming inflation data. Analysts noted that firm activity supports the dollar and Treasury yields while creating pressure on highly valued growth stocks.

The University of Michigan's final October consumer sentiment index printed at 48.0, above the 46.3 estimate but fractionally below September's 48.1, leaving it as the second-worst reading in the survey's history. Current conditions fell sharply to 46.7 from 50.9 in September, while the expectations component rose to 48.8 from a preliminary 47.3. Inflation expectations held firm, with the one-year outlook at 4.7%, up from September's 4.6%, and the five-year outlook at 3.5%, unchanged from the prior month.