SaltWire's Atlantic regional weather forecast for October 24, 2023 | SaltWireWASHINGTON/LONDON - U.S. business activity ticked higher in October while output in the euro zone took a surprise turn for the worse, surveys showed on Tuesday, underscoring the diverging path for central bankers in the two regions and fanning fears the bloc may slip into recession.
It was the highest level since July in the latest sign the U.S. economy is withstanding the surge in interest rates spurred by the Federal Reserve's campaign to beat back inflation. Growth has persisted all year even as most economists until recently had expected the Fed's 5.25 percentage points of rate hikes since March 2022 to trigger a recession and a rise in joblessness.
HCOB's flash euro zone Composite Purchasing Managers' Index , compiled by S&P Global and seen as a good guide to overall economic health, fell to 46.5 in October from September's 47.2 and its lowest since November 2020. "The flash PMIs mark a poor start to October for the euro zone, especially after showing some early signs of recovery in September," said Rory Fennessy at Oxford Economics.Suggesting a recession is well underway in Germany, Europe's largest economy, business activity contracted there for a fourth straight month as the downturn in manufacturing was matched by a renewed decline in services, its PMI showed.
Service-sector cost inputs grew at their slowest pace in three years while service providers increased prices by the smallest margin since the spring of 2020 shortly after the coronavirus pandemic erupted. Other recent data have shown progress on that front, with a"super core" measure of inflation - services costs excluding energy and housing - having risen in August by the least in 13 months. The Commerce Department will report the figure for September on Friday.