The Manufacturing PMI rose from 47.3 in September to 47.8 in October, signaling a deterioration in business conditions within the goods-producing sector for a fourth month in a row. However, this is still 0.2 points above the consensus as well as the slowest rate of deterioration since August.

The services PMI grew slightly from 55.2 in September to 55.3 in October. This was driven mainly by the largest rise in new business into the service sector since April 2022 and in turn fueled by rising domestic demand, which offset a marginal fall in export orders for services.

Future sentiment after slumping to a 23-month low in September, rebounded sharply in October, with optimism about output in the coming year hitting a 29-month high. This underscores the volatile nature of the current business and political environment as the US Presidential Election nears.

Details for manufacturing include a 0.9-point rise for output to 48.8 but new orders fell for a fourth straight month, albeit at a slower rate of decline than September's 15-month peak. Stocks (inventories) of purchases, fell at the sharpest rate for 14 months.

Input cost inflation slowed, though remained elevated by historical standards, especially in the service sector. Average prices charged for goods and services rose sharply, registering the smallest monthly increase since May 2020.

The PMI composite weighted overwhelmingly towards services, rose from 54.0 in September to 54.3 in October which signaled a sustained expansion of business activity. By sector, growth remained uneven, with the service sector growing at a strong steady rate while manufacturing output continues to decline.

The US PMI manufacturing index is expected to contract at 47.6, while the service index is expected to expand at 55.0, slightly less than September's 55.2 but still an improvement overall.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector output by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around 10 days ahead of the final report and are typically based upon around 85 percent of the full survey sample. The report tracks changes in variables such as new orders, stock levels, employment and prices across both manufacturing and services. Production is also tracked, defined as"production" for manufacturing and"output" for services. Results are synthesized into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster output is growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The data are produced by S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.