US Manufacturing Surveys Mixed In October; Prices Down, Production Up

The US economy is being judged by soft survey data due to a month-long vacuum of macro data caused by the shutdown. The S&P Global US Manufacturing PMI rose to 52.5, exceeding expectations, and signaling a third successive month above the critical 50.0 no-change mark. This indicates a solid improvement in operating conditions, with gains in both output and new orders, and production increasing at a solid pace. The gain in new orders was the best recorded in 20 months, with growth in new work registered consistently throughout the year. However, the growth was increasingly reliant on the domestic market as new export orders faltered. In contrast, the ISM's US Manufacturing PMI missed expectations, falling to 48.7, marking the 8th straight month of contraction. Despite the solid start to the fourth quarter, the picture is not healthy, with an unprecedented rise in unsold stock reported in October, which could trigger a downshifting of production in the coming months. Companies have become less optimistic about the year ahead, with sentiment back down close to the gloomy levels seen around the April tariff announcements. US trade policy uncertainties and tariff policies are dampening business spirits, with export and import worries being exacerbated by domestically focused political concerns, including the federal shutdown. The business confidence among producers of consumer goods is now down to its lowest for two years, as firms grow increasingly worried about household spending in the US and falling sales to consumers in export markets.