The U.S. economy continued to prosper in October, with business activity expanding at the fastest pace in more than four years, manufacturing conditions reaching their strongest level since 2022, and factory hiring accelerating to the fastest pace in nearly 15 years.
The S&P Global U.S. Composite Purchasing Managers’ Index for October was initially reported at 57.6, slightly lower than September’s 58.4, but still the second-highest reading since March 2022. Readings above 50 indicate expansion, with higher numbers indicating more widespread growth.
The survey pointed out that both the manufacturing and service industries experienced strong growth, supported by strong domestic demand, export growth and the acceleration of new orders.
“October’s PMI preview data shows that the U.S. economy continues to prosper early in the fourth quarter,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Williamson said the findings were consistent with gross domestic product growing at an annualized rate of 5% in the fourth quarter, following an estimated 4% growth in the third quarter.
Excluding the post-pandemic reopening of the economy, business growth in recent months has been the strongest sustained period since early 2015, according to S&P Global.
Manufacturing expansion reaches four-year high
Manufacturing was one of the strongest performers in the report.
The S&P Global Manufacturing PMI rose to 56.0 in October from 55.9 in September, reaching the highest level in 53 months. The data marked the strongest improvement in manufacturing business conditions since May 2022.
Factory production continued to expand rapidly, with the manufacturing output index at 55.8, slightly lower than September’s 56.2. New orders also continued to grow strongly, albeit at a slightly slower pace than last month.
Manufacturing employment grew at the fastest pace since March 2012, showing that factories are expanding employment to meet rising demand and increase production capacity.
Manufacturers also reported higher purchases of materials and higher inventories, with input inventories growing at the fastest pace in four months.
Business confidence in the manufacturing sector has improved significantly and is close to the long-term average, as companies become more optimistic about future demand and economic conditions.
The service industry also continues to expand rapidly. The preliminary value of the services PMI business activity index in October was 57.9, compared with 58.8 in September. Although the decline was modest, the reading was still the strongest in the past five years.
New orders and hiring surge
One of the clearest signs of continued economic growth comes from new orders, which are growing at the fastest pace in four-and-a-half years.
Services companies posted their strongest new business growth since March 2022. Manufacturing orders also continued to grow strongly.
The growth in demand is accompanied by a sharp increase in unfinished work. The backlog is building up at the fastest pace since May 2022, showing that businesses are receiving more orders than they can fulfill immediately.
Companies responded by increasing recruitment.
Job growth in manufacturing and services was the second fastest since June 2022, behind gains in September. Manufacturing employment growth reached its highest level since March 2012, while services employment recorded the third largest increase in more than four years.
The hiring growth shows that companies are expanding their workforces to meet growing demand, rather than expecting the current expansion to fade quickly.
The report also shows that demand from overseas customers is increasing.
Export orders grew at the fastest pace since May 2022. Manufacturers reported export orders rose for the first time since June 2025, while services companies recorded their strongest export growth since July 2023.
The improvement in foreign sales suggests international demand is beginning to strengthen an expansion driven largely by U.S. consumers and businesses.
Growth remains strong despite rising costs
The survey also shows that as economic activities accelerate, companies are facing increased costs.
Sales prices in manufacturing and services rose at the fastest pace since August 2022. Businesses reported higher energy and transportation costs, higher raw material prices and higher wages and other operating expenses.
Strong demand and growing backlogs make it easier for companies to pass these costs on to customers.
Supply chains are also showing signs of strain as manufacturers report extended delivery times, material shortages and growing pressure on suppliers.
Despite these challenges, business expectations for output in the coming year remain close to their peak levels in 2026. While confidence in services companies fell from September, optimism in the manufacturing sector increased significantly.