On Friday, the initial PMI of Markit services in the United States in October was 58.2, expected to be 55.1, compared with the previous value of 54.9, while the initial PMI of Markit manufacturing in the United States recorded 59.2 in October, the lowest since March.
Chirs Williamson, chief economist of the IHS Markit, said that as the number of new COVID-19 cases continued to decline, the recovery in US service sector activity in October marked a strong start to the fourth quarter and was encouraging. Hiring has also increased as companies are encouraged to expand capacity to meet growing demand.
However, while manufacturing also showed strong demand, factory production remained constrained, including record supply chain bottlenecks and labour shortages. The price of raw materials paid by factories is rising at another record rate, which in turn pushes up factory costs and spills over to higher prices in the service sector. In order to attract or retain employees, the government has also had to raise wages, adding to inflationary pressures. So while the economy is expected to grow more strongly in the fourth quarter, the rise in inflationary pressures shows no sign of abating.