U.S. October Sales Growth Robust As Elections Draw Closer

The latest update from the S&P Global Flash US Composite PMI suggests a robust output for the US economy, coupled with a slowing inflation rate. With positive news right before the Presidential Election, how could this new data release affect the outcome, if at all?

The Flash PMI, or Purchasing Managers’ Index, is a common fundamental indicator that signifies the prevailing trends of the service and manufacturing sectors of the US economy.

A PMI figure above 50 signals an expansion in the sector, while a figure below 50 shows a decline.  The month of October has seen significant growth in the services sector PMI, while the manufacturing PMI has been underwhelming for a third month on the trot. However, the overall sentiment indicated by the figures have been positive for Q3 October.

October output and sales growth strong, slowest selling price rise since October 2020

October saw the Composite PMI figure of 54.3, which is the highest figure seen in two months and a 0.3 point increase since September. This uptick indicates a robust expansion of business activity in the US towards the start of the fourth quarter of 2024.

The report also states some contraction in manufacturing output. The Flash US Manufacturing Index for October is 48.8, which is a 3-month high. However, the service sector growth was the most eye-catching. The US Services Business Activity Index reached a 2-month high of 55.2.

this signifies a robust rise in business activity in the US, with the service sector being the primary driver for Q3 October. Uncertainty ahead of the Presidential Election has negative affected the employment figures, which fell for a third consecutive month.

going forward, the sudden rise in optimism for October shows positive sign for the pre-election US economy. Such economic developments may or may not have an effect on the outcome of the election due on November 5.

How could new PMI figures affect the Presidential Election?

The November 5 Presidential Elections are on the horizon. With brand new PMI data for the third quarter of 2024, could robust services sector activity be a difference-maker in the outcome of the elections?

While the health of the economy under the Biden administration has been a hot-button topic in the pre-election debates between Donald Trump and Kamala Harris, the extent to which new PMI data could sway the electorate remains to be seen.

A decline in the manufacturing activity could prove to be more problematic than a healthy services sector PMI. Furthermore, the debates leading up to the election have been focused on a range of other important issues as well. The topic of security has proven to be the cornerstone of election campaigns throughout 2024.

While the new PMI updates are certainly noteworthy, particularly for the business communities on either side of the aisle, this news is unlikely to be enough to sway voter sentiment overall. Many different issues need to be tackled by the incoming president, of which business performance is only a fraction.

However, this does not mean that the PMI figures should be ignored. On the contrary, PMI shows vital information that can become a part of the broad policy of the president-elect. Both candidates have been vocal about the manufacturing competition between China and the US. Therefore, PMI figures could become more important as election results become public. The business sector is likely to pay great attention to the November elections for this reason as well.