Consumer Goods Leads Broad-Based Upturn in October

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Key points:

• Consumer goods output rises at fastest pace since February 2015  
• Technology posts second-strongest growth following near-stagnation in September 
• Consumer services ranks bottom but still sees solid rise in activity

The release of October US Sector PMI data from Markit pointed to a sharp upturn in economic growth across both manufacturing and services. That was consistent with the US Composite PMI Output Index climbing to an 11-month high of 54.9. Consumer goods led the way, followed by technology. Financials was the only sector to see growth slow since September, though the pace of expansion was still solid overall.

Consumer goods, the best performer in Q3 on average, returned to the summit of the sector rankings in October. Output increased at the sharpest pace in 20 months, helped by a substantial rise in new work.  Employment barely rose, however, suggesting doubts remain about the near-term outlook.

Last month’s growth leader, financials, was unique in posting a slowdown during October. That said, activity still rose solidly overall and the rate of job creation picked up on the back of the sector’s recent strong performance.

Technology was the second-fastest growing sector, following a near-stagnation in output at the end of the third quarter. Data highlighted a bounceback in new business as the main driver of activity growth.

Industrials, basic materials, healthcare and consumer services all posted solid expansions of output. The latter saw the weakest rise, but that still represented an improvement from modest growth in the preceding three months.

The increase in industrials output was the most marked in 12 months. Healthcare signalled a similar upturn, with growth edging up to a one-year high.

Growth of basic materials production was meanwhile indicative of an upturn across the manufacturing economy as a whole. Notably, exports rose for the first time since January.