Investing.com – Business activity in the U.S. private sector increased more than expected in October, bolstering optimism over the American economy, according to preliminary data released on Tuesday.
In a report, market research group IHS Markit said that its composite purchasing managers’ index (PMI), covering both the manufacturing and services sectors, rose to 55.7 in October, from the prior reading of 54.8. That was its highest level since January.
On the indices, a reading above 50.0 indicates expansion, below indicates contraction.
The research group also said that its flash services purchasing managers’ index (PMI) increased to 55.9 in October, from the prior month’s reading of 55.3.
Analysts had expected the reading to rise to just 55.6.
Services make up approximately 80% of the U.S. economy which makes the data key for interpreting growth.
IHS Markit also said that its flash manufacturing purchasing managers’ index (PMI) advanced to 54.5 in October from the prior month’s final reading of 53.1.
Economists had estimated that it would rise to only 53.5.
As a negative, IHS Markit noted that growth of overall new business volumes moderated further from the two-year peak seen in August.
“This reflected a slowdown in the service sector, as manufacturing firms reported the strongest rise in new work since March,” these experts explained.
IHS Markit associate director Tim Moore said the surveys pointed to a strong start to the fourth quarter.
“Resilient service sector growth and an encouraging rebound in manufacturing production combined to generate one of the sharpest rises in private sector output for two and-a-half years during October,” Moore said.
After the report, EUR/USD was trading at 1.1757 from around 1.1754 ahead of the release of the data, GBP/USD was at 1.3153 from 1.3148 earlier, while USD/JPY traded at 113.83 compared to 113.95 before the release.
The US dollar index, which tracks the greenback against a basket of six major rivals, traded at 93.78 compared to 93.80 before the report.
Meanwhile, U.S. stocks were trading mostly higher after the open. The Dow 30 gained 159 points or 0.69%, the S&P 500 rose 3 points, or 0.11%, while the tech-heavy Nasdaq Composite was unchanged.
Elsewhere, in the commodities market, gold futures traded at $1,278.16 a troy ounce, compared to $1,277.65 ahead of the data, while U.S. crude oil changed hands at $52.30, compared to $52.24 earlier.