(Bloomberg) — U.S. business activity grew at a slightly slower pace in October but remained near a multi-year high as robust demand led to higher new orders, employment and prices.
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The S&P Global flash composite index fell 0.8 points to 57.6 in October, according to data released Friday. This is the second highest number since 2022. Numbers above 50 indicate expansion.
The sales price indicator rose at the fastest pace in more than four years, reflecting a sharp rise in the cost of energy, transportation and raw materials.
“Cost pressures remain a major concern, particularly as the renewed rise in oil prices spills over into a wide variety of goods and services,” Chris Williamson, chief economist at S&P Global Market Intelligence, said in a statement.
Bottlenecks are also getting worse. Supplier delivery times have lengthened the most since 2022, with S&P Global citing material and labor shortages as well as overworked suppliers and shipping delays.
Nonetheless, Williamson said that aside from pandemic reopening, U.S. businesses are experiencing their strongest period of growth since 2015.
Strong consumer spending, AI-powered investment, and defense spending have all supported U.S. businesses this year. New orders, an indicator of demand, recorded the fastest growth in four and a half years in October.
Businesses respond by adding more workers. The composite employment index was the second highest in four years, and the manufacturing index showed factory payrolls grew at the fastest pace since 2012.
Looking ahead, investments in artificial intelligence and related technologies are also expected to support demand and the economy as a whole next year. Forecasters raised their estimates for private investment growth in the third quarter and for all of 2027 in the latest Bloomberg News survey of economists.
The group’s overall manufacturing index rose to 56, its highest level since May 2022, while a gauge of activity among service providers eased.
–With help from Julia Fanzeres, Dana Morgan and Aidan Williams.
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