The S&P Global US Manufacturing Purchasing Managers' Index improved to 52.5 in October (up from the 52.2 flash estimate), compared to 52.0 in September, and better than expectations for no change in the Econoday survey of forecasters. Tariffs continue to be a drag on exports, while stronger output and new orders fuel domestic activity. Trade policy uncertainty is also limiting confidence in the outlook.

Tariffs also continued to underpin a steep level of cost inflation in the manufacturing economy, the report said. Employment growth meanwhile remained modest amid evidence of spare plant capacity.

It noted a solid rise in production, as well as the best increase in new orders for 20 months. Growth in new work has been registered consistently throughout the year to date, albeit to varying degrees, and panelists noted in October an uplift in market demand and success in securing new contracts, it said.

Tariffs caused sales to key markets Canada, China, Europe, and Mexico to fall.
Overall confidence remained historically subdued and dropped to its lowest since April, despite some firms expecting to benefit from a reshoring of industrial production and domestic demand in the months ahead, the report said.

Input costs were higher in October, with inflation remaining elevated. As a result, there was an increase in selling prices and to a quicker degree than September's recent low.

The call is no change from the flash at 52.2 in the PMI manufacturing final, which suggests surprising ongoing resilience, a stronger reading than the more widely-used ISM manufacturing data.

Based on monthly questionnaire surveys of selected companies, the Purchasing Managers' Manufacturing Index (PMI) offers an advance indication on month-to-month activity in the private sector economy by tracking changes in variables such as production, new orders, stock levels, employment and prices across manufacturing industries. The final index for the current month is released roughly a week after the flash.

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 ISM manufacturing index in the U.S. and the Markit PMIs in the U.S. and elsewhere, 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.

The Markit PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.

Markit originally began collecting monthly Purchasing Managers' Index (PMI) data in the U.S. in April 2004, initially from a panel of manufacturers in the U.S. electronics goods producing sector. In May 2007, Markit's U.S. PMI research was extended out to cover producers of metal goods. In October 2009, Markit's U.S. Manufacturing PMI survey panel was extended further to cover all areas of U.S. manufacturing activity. Back data for Markit's U.S. Manufacturing PMI between May 2007 and September 2009 are an aggregation of data collected from producers of electronic goods and metal goods producers, while data from October 2009 are based on data collected from a panel representing the entire U.S. manufacturing economy. Markit's total U.S. Manufacturing PMI survey panel comprises over 600 companies.