Growth in US economic activity accelerated in October, overcoming supply chain problems and labor and material shortages, according to the Flash Composite Purchasing Managers Index released on Friday by IHS Markit.
The overall index now stands at 57.3, down from 55 last month, with the service sector index at 58.2, a three-month high and down from 54.9 in September. Manufacturing slipped to 59.2 from 60.7 in September, recording a seven-month low.
Economists projected the services index at 55.2 and the estimated manufacturing index at 60.7.
“US private sector companies saw a strong and accelerated recovery in service-led output in October,” the report says, “with strongest growth in three months, although it remains much weaker that at the beginning of the year “.
The report noted that companies were struggling with a backlog of orders, limited by a lack of workers and key parts. Prices have risen at a record pace, reflecting rising inflation in many categories of goods.
The report mirrors many other recent readings on the economy, which show strong demand from customers facing shortages and higher prices.
Political cartoons on the economy
Economists have blamed the current imbalance between supply and demand on the coronavirus, especially the delta variant which started appearing in the summer and has not yet fully receded.
Restrictions on businesses, such as masking and vaccination warrants, have created holes in the global supply chain and countries are responding differently to the latest outbreak. The situation has shed new light on the global nature of trade, which has been praised for maintaining supply and falling prices in recent years.