US Economy Maintains Solid Momentum as PMI Figures Signal Strength

The final S&P Global Composite PMI came in at 54.6, with Services at 54.8. Manufacturing PMI, released earlier in the week, stood at 52.2.

Meanwhile, the ISM Non-Manufacturing PMI surprised to the upside at 52.4, above economist expectations of 50.8 and up from 50.0 in September. Any reading above 50 indicates expansion.

Beyond the headline

S&P reported that “higher service sector output was accompanied by a firm rise in incoming new business,” though uncertainty around the economic and political outlook meant that hiring growth was modest and business confidence fell to a six-month low.

The pace of job creation remained subdued, with many firms noting that departing staff were not being replaced amid cost pressures. Tariffs were also cited as a source of rising input costs.

On the demand side, enquiry levels improved from September. While activity accelerated, service providers were largely able to manage workloads, with only marginal increases in backlogs.

Firms were broadly optimistic about future output. Businesses welcomed recent interest rate cuts that have bolstered sentiment, though they remained cautious about federal policy support for growth.

Export demand remained a weak spot. The ISM New Export Orders Index rose to 47.8 in October from 46.5 in September, signalling continued contraction. ISM respondents said “customers [were] hesitant to spend on capital expenditures” and noted that recent increases were “primarily due to year-end ordering patterns creating a small, temporary spike in demand.”

Relation to the real economy

The strong PMI readings align with broader indicators of US growth. GDP expanded at an annualised rate of 3.8% in the second quarter, according to the Bureau of Economic Analysis, while the Atlanta Fed’s GDPNow model projects 4.0% growth in the third.

October’s ADP National Employment Report also surprised to the upside, showing a 42,000 increase in private-sector jobs, above forecasts of 28,000.

Still, both PMI and survey respondents expressed caution about the months ahead, citing policy uncertainty and tariff pressures as potential drags on momentum.

The data suggest an economy still expanding at a healthy pace but facing limits to confidence and hiring, with external trade and fiscal ambiguity tempering an otherwise solid domestic backdrop.