U.S. private sector business activity growth accelerated marginally in October - IHS Markit's survey

Preliminary data released by IHS Markit on Thursday pointed to sustained modest rate of U.S. private sector growth during October.

According to the report, the Markit flash manufacturing purchasing manager's index (PMI) came in at 51.5 in October, up from 51.1 in September. That was the highest reading since April. Economists had expected the reading to drop to 50.7. A reading above 50 signals an expansion in activity, while a reading below this level signals a contraction. According to the report, the increase in the headline PMI was due to stronger growth of output, new orders and employment.

Meanwhile, the Markit flash services purchasing manager's index (PMI) edged up to 51.0 this month, from 50.9 in the prior month. The latest reading was the highest one since July. Economists had expected the reading to increase to 51.0. New business intakes stagnated in October, which ended a ten-year period of sustained expansion, the report said. In addition, employment decreased for the second month running in October and the rate of decline in was the largest recorded by the survey since December 2009.

Overall, IHS Markit Flash U.S. Composite PMI Output Index came in at 51.2 in October, up from 51.0 in September, signaling the sharpest increase in business activity since July.

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at HIS Markit, noted: “The overall subdued picture reflects a spreading of economic weakness from manufacturing to services, but encouragingly we are now seeing some signs of manufacturing pulling out of its downturn, in part driven by a return to growth for exports and improved sentiment about the year ahead, linked to hopes that trade war tensions are starting to ease.”