The latest update to the US S&P Global Flash Composite PMI points to strong output for the US economy, along with a slowing inflation rate. With the positive news immediately preceding the presidential election, how might the release of this new data affect the outcome, if at all?
The Flash Purchasing Managers’ Index, or PMI, is a common core index that indicates trends in the services and manufacturing sectors of the US economy.
A PMI number above 50 indicates expansion in the sector, while a number below 50 indicates a decline. October saw significant growth in the services PMI, while the manufacturing PMI was disappointing for the third month in a row. However, the overall sentiment indicated by the numbers was positive for the October third quarter.
Production and sales growth in October was strong, and the slowest rise in selling prices since October 2020
October saw the composite PMI number at 54.3, the highest number in two months and an increase of 0.3 points since September. This rise indicates a strong expansion in business activity in the United States at the beginning of the fourth quarter of 2024.
the a report It also provides for some contraction in manufacturing output. The US rapid manufacturing index for October reached 48.8, the highest level in 3 months. However, the growth of the services sector has been most striking. The U.S. services business activity index reached a two-month high of 55.2.
This indicates a strong rise in business activity in the US, with the services sector the main driver of the October third quarter. The uncertainty ahead of the presidential elections negatively affected employment numbers, which fell for the third month in a row.
Going forward, October’s surge in optimism shows a positive sign for the US economy ahead of the election. Such economic developments may or may not have an impact on the outcome of the elections scheduled for November 5.
How could new PMI numbers affect the presidential election?
The November 5 presidential election looms. With brand new PMI data for Q3 2024, could strong services sector activity be a difference maker in the election results?
While the health of the economy under the Biden administration has been a hot topic in the pre-election debates between Donald Trump and Kamala Harris, it remains to be seen how much the new PMI data will be able to sway voters.
A decline in manufacturing activity may be more problematic than a good PMI for the services sector. Moreover, the pre-election discussions focused on a range of other important issues as well. The issue of security has proven to be a cornerstone of election campaigns throughout 2024.
While the new PMI updates are certainly noteworthy, especially for business communities on both sides of the aisle, this news is unlikely to be enough to sway voter sentiment overall. There are many different issues for the next president to address, of which business performance is only a small part.
However, this does not mean that PMI numbers should be ignored. On the contrary, the PMI shows vital information that could become part of the president-elect’s public policy. Both candidates have been vocal about Manufacturing competition Between China and the United States. Therefore, PMI numbers could become more important when the election results become public. The business sector is likely to pay close attention to the November elections for this reason as well.
