Preliminary prints for October Services and Manufacturing in America beat expectations and rose to 2017 highs pushing the composite index to its highest since January.
Commenting on the flash PMI data, Tim Moore, Associate Director at IHS Markit said:
“The US economy seems to have made a strong start to the final quarter of 2017. Resilient service sector growth and an encouraging rebound in manufacturing production combined to generate one of the sharpest rises in private sector output for twoand-a-half years during October.
“There were also positive developments in terms of staff hiring and business optimism during October, suggesting that private sector firms are gearing up for sustained growth in coming months.
“Service providers noted that supportive underlying economic conditions had helped to drive up business and consumer spending. Manufacturers cited an element of catch-up to production schedules and orders, following hurricane-related disruption in the third quarter. Goods producers also experienced the strongest rise in export orders since August 2016, suggesting a boost from improving external demand.
“The main near-term concern for manufacturers is that national supply chain pressures remain the most widespread since those recorded after heavy snowfall in early-2014. In particular, survey respondents pointed to depleted inventories among suppliers, ongoing transport delays and sharply rising raw material prices during October.”
But not everyone is gullible enough to fall for these 'soft' survey-based signals that everything is awesome. As UBS chief economist Pual Donovan exclaims...
#Fakeeconomics is due today.
Assorted business sentiment opinion polls are scheduled.
The trend of correlation between these numbers and reality is declining.
Investors should ask themselves "when did I last voluntarily fill in a survey?" before placing faith in survey evidence.