US business activity accelerates in October, shortages weigh on factories, according to PMI

Business activity in the United States showed strong growth in October, suggesting that the economy is recovering since the beginning of the fourth quarter as COVID-19 infections decline, although shortages of labor and raw materials slowed the growth. manufacturing rate.

Data firm IHS Markit said its US composite PMI production index, which includes the manufacturing and services sectors, recovered to a level of 57.3 in the first half of this month from 55 in September.

A reading above 50 indicates growth in the private sector.

A resurgence of coronavirus infections, driven by the Delta variant, has weighed on demand for services at consumer-facing businesses such as restaurants, hotels and air travel. Along with shortages in nearly every industry, the outbreak of infections slowed economic activity.

The growth estimates of the Gross Domestic Product (GDP) for the third quarter are mostly below an annualized rate of 3%. The economy grew at a rate of 6.7% in the second quarter. The government is due to publish its preliminary GDP data for the third quarter next Thursday.

The rebound in business activity this month was driven by the services sector. The anticipated services sector PMI from the IHS Markit survey rebounded to a reading of 58.2 from 54.9 in September.

Economists polled by Reuters had forecast a reading of 55.1 this month for the services sector, which accounts for more than two-thirds of US economic activity.

Service industry companies reported that unfinished work accumulated at the fastest rate since the data firm began tracking the series 12 years ago. This happened despite the fact that the companies pushed the hiring. Companies continued to complain about difficulties in finding workers.

There were 10.4 million job openings at the end of August. Approximately 7.7 million people were officially unemployed in September in the United States.

The labor market mismatch has been attributed to additional unemployment benefits that recently ran out, people leaving their jobs to care for their families due to the pandemic and fear of contracting the coronavirus. The COVID-19 pandemic has also led to early retirements and career changes.