Economic activity in the U.S. grew at the fastest pace in more than a year and a half as businesses anticipated greater demand, an easing of coronavirus-related restrictions and less uncertainty following November’s election, surveys of purchasing managers showed.
The U.S. survey figures are the latest sign the economy continues to recover from the shock created by the coronavirus pandemic. Worker filings for jobless benefits so far this month fell to the lowest level since the pandemic started, and existing-home sales rose 9.4% in September, a 14-year high.
The surge in optimism stands in contrast with Europe, where a resurgence of coronavirus cases is threatening to halt the region’s economic recovery.
said Friday its composite Purchasing Managers Index for the U.S. rose to 55.5 in October from 54.3 in September, the highest level in 20 months. Among service firms, the index increased to 56 from 54.6, while the manufacturing index stood at 53.3, a slight rise from 53.2 in September.
A reading above 50.0 indicates that activity is increasing, while a reading below points to a decline.
U.S. companies noted that demand slowed slightly in October, particularly from abroad. Respondents to the survey said some customers were still dealing with coronavirus-related disruptions or had delayed new orders until after the election.
But that wasn’t enough to dim respondents’ bright outlook. Business confidence in both services and manufacturing rose to the highest level since May 2018, according to the survey.
Chris Williamson, chief business economist at IHS Markit, said companies were increasingly hopeful about the prospect of another round of federal stimulus, an easing of pandemic restrictions and more certainty about the political situation.
“The U.S. economy looks to have started the fourth quarter on a strong footing,” he said.
Economists surveyed by The Wall Street Journal expect the U.S. economy grew at an annualized rate of 28.5% in the third quarter. That would represent a record growth rate, but it wouldn’t be enough to overcome the 31.4% decline in the second quarter. The U.S. is set to release third quarter growth figures next Thursday.
Get a coronavirus briefing six days a week, and a weekly Health newsletter once the crisis abates: Sign up here.
The U.S. is also seeing a fresh wave of infections, but the number of cases hasn’t yet passed the peak recorded in July. So far, governments haven’t imposed widespread restrictions, which has helped businesses recover.