US business growth cools in October as inflation pressure builds

US business activity is still growing — just not as fast. The Composite Output Index, which bundles services and manufacturing, landed at 55.9 in October, S&P Global said Wednesday in its final reading. Anything above 50 means expansion, so the economy is still moving forward, just at a gentler clip.

Services led the slowdown in the details. The Services PMI Business Activity Index came in at 56.1, down from 58.8 a month earlier, though it stayed comfortably in growth territory. Manufacturing and services together still point to an economy expanding rather than stalling.

S&P Global's Chief Business Economist Chris Williamson called it a strong opening to the fourth quarter, with the surveys signaling GDP growth at an annualised rate above 4%. Tech was the standout performer, he said, but consumer-facing sectors and financial services pitched in with solid showings of their own.

The shine comes with a smudge. Williamson said the growth news is clouded by a fresh, worrying build-up of inflationary pressures, along with some disappointing forward-looking indicators buried in the survey. In other words, the headline number looks healthy while the warnings underneath get louder.

Zoom out and the trend is clear: the composite index has cooled from 58.4 back in May to 55.9 now. That is a five-month slide in momentum, even as the reading stays firmly on the expansion side of the line. The question now is whether inflation pressures ease as fast as the growth rate has.