October Flash PMIs: Q4 Opens With a Boom — Composite 57.6, Output Prices Highest Since August 2022 (59.8), Delivery Times at a 4-Year Low

October Flash PMIs: Q4 Opens With a Boom — Composite 57.6, Output Prices Highest Since August 2022 (59.8), Delivery Times at a 4-Year Low

The release (Friday Oct 23): S&P Global's flash October US Composite PMI slipped to 57.6 from September's five-year-high 58.4 — still deep in expansion, and per Reuters evidence the economy "started the fourth quarter on solid footing." The detail underneath is the story:

• New orders rose to 58.2 — the highest since March 2022 (from 58.1), led by services, with S&P Global citing "rising domestic demand, boosted partly by precautionary stock building" plus export growth.
• Output prices jumped to 59.8 — the highest reading since August 2022 (from 58.4), with businesses "across manufacturing and services sectors" raising prices.
• Suppliers' delivery times fell to 38.1 — a more than four-year low (from 40.9): the bottlenecks are worsening, not clearing.
• Factory employment hit its highest level since March 2012, with manufacturers hiring "to boost capacity to fulfill stronger customer demand."
• Input prices eased to a still-high 64.9 (from 65.9).

Chris Williamson, S&P Global chief business economist: "Cost pressures remain a key concern… Supply chain bottlenecks have meanwhile intensified, and order book backlogs are growing, making it easier for companies to pass higher costs on to customers."

Reuters' framing of the macro backdrop: economists expect the advance Q3 GDP (due Oct 29) to show ~3.0% annualized growth, "mainly driven by consumer spending and business investment in AI," and the economy "has so far not shown any signs of buckling under the weight of the oil price shock"¹ — cushioned by savings, spring tax refunds, tariff refunds, stock gains and corporate profits. But economists warned the war's inflation fallout "was likely to slow consumer spending this quarter," and "economists expect the US central bank to stand pat at its meeting next week and hike borrowing costs again in December."

What it means

The survey sector is the mirror image of the household sector: while U-Mich sentiment sits at the second-lowest reading on record (U-Mich October Final: 48.0 — Second-Lowest on Record — Independents' Sentiment Craters to 42.4 as Year-Ahead Inflation Expectations Rise Again to 4.7%), businesses are booking the strongest demand since early 2022 and raising prices at the fastest pace in four years. This is the "booming nominal economy" BofA's Aditya Bhave says risks the Fed falling behind the curve (Into the Blackout: October Hold Priced ~83-92% but the Hike Case Is Alive — BofA Sticks With October (Core PCE to 3.4% by Year-End), Oxford Says 'October Is a Live Meeting,' Harris Calls It 50-50), and it corroborates the September CPI/PPI acceleration (September CPI: Headline Jumps to 3.7% y/y on a 9.1% Gasoline Spike — Core Picks Up to 2.6% as Pressure Broadens Past Energy, and Real Wages Fall for a Second Straight Month, September PPI Shatters Forecasts: +1.3% m/m Is the Biggest Monthly Jump Since March 2022, +6.3% y/y the Largest Since December 2022 — Core Hits 5.0%) as broadening beyond energy. The delivery-times collapse is the war premium showing up as physical bottlenecks, not just a futures price. For the cycle call: growth is not the constraint — the December hike stays the base case, and the risk is that Q4 price momentum forces a faster pace than the once-per-quarter path.