US Business Activity Ticks Up While Eurozone Gauge Fans Recession Fears

• U.S. business activity ticked higher in October while output in the eurozone took a surprise turn for the worse, surveys showed on Tuesday, underscoring the diverging path for central bankers in the two regions and fanning fears the bloc may slip into recession.
• In the United States, the manufacturing sector pulled out of a five-month contraction on a pickup in new orders, and services activity accelerated modestly amid signs of easing inflationary pressures.
• S&P Global said its flash U.S. Composite Purchasing Managers Index tracking both the manufacturing and service sectors rose to 51.0 in October - one point above the 50 level that separates expansion and contraction - from a final September reading of 50.2.
• It was the highest level since July in the latest sign the U.S. economy is withstanding the surge in interest rates spurred by the Federal Reserve's campaign to beat back inflation. Growth has persisted all year even as most economists until recently had expected the Fed's 5.25 percentage points of rate hikes since March 2022 to trigger a recession and a rise in joblessness.
• Later this week the Commerce Department will offer up its scorecard of economic activity for the third quarter, with economists polled by Reuters estimating gross domestic product growth was the swiftest in nearly two years in the period from July through September. The S&P Global survey suggests that momentum has carried over into the start of the fourth quarter.
• "Hopes of a soft landing for the U.S. economy will be encouraged by the improved situation seen in October," Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement. "The S&P Global PMI survey has been among the most downbeat economic indicators in recent months, so the upturn in U.S. output growth signalled at the start of the fourth quarter is good news."

(Source: Reuters)