The S&P Global US Composite Purchasing Managers' Index preliminary reading came in at 54.8 in October compared to 53.9 in September, and 54.6 in August, signaling a pickup in business activity growth at the second fastest pace so far in 2025 although employment saw only a small uptick and manufacturing activity stagnates.

The US Services PMI Business Activity Index recorded 55.2 in October, up from 54.2 in September, and beating expectations of 54.0 in the Econoday survey of forecasters.

Improvements in output and new work were recorded in manufacturing and services, though both sectors signaled falling exports. Factories also reported falling input buying amid a steep drop in backlogs of work and an unprecedented build-up of unsold stock, it said.

The report noted that job gains were only modest, and actually weakened in the manufacturing sector. Jobs growth was also limited by a worsening of business confidence, principally reflecting ongoing concerns over the impact of government policies such as tariffs, it added. Sentiment was supported, however, by lower interest rates.

As for price inflation, the report said costs of goods and services rose at the slowest pace since April, but firms' costs continued to increase sharply, due to tariffs and upward wage pressures.

Input cost inflation remained elevated in October, running below the highs seen earlier in the year but picking up slightly since September. Despite being the lowest since February, manufacturing input price inflation remained especially high, once again widely attributed to tariffs, it said. Service sector cost inflation meanwhile was the highest for three months, registering one of the steepest increases seen over the past two years. Higher wage costs reportedly often added to the inflationary impact of tariffs on purchased input costs.

The manufacturing PMI is expected at 52.1 for the October flash versus 52.0 in September final. Services is seen at 54.0 versus 54.2 in the September final.

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.