US business activity strongest in 20months

US business activity grew in October at the strongest pace since February 2019 and business expectations advanced to a more than two- year high, underscoring solid momentumfor the recovery at the start of the fourth quarter.

The IHS Markit flash composite index of purchasing managers at manufacturers and service providers increased to 55.5 from 54.3, the group reported yesterday. Readings above 50 indicate growth and the figure stands in contrast to the euro area, where the gauge contracted for the first time in four months.

Japan contracts

In Japan, business activity contracted for a ninthmonth.

“The US economy looks to have started the fourth quarter on a strong footing,” Chris Williamson, chief business economist at IHS Markit, said in a statement. “More encouragingly, business optimism surged higher, indicating that firms have become increasingly positive about prospects for the coming year” on a further easing of virus- related restrictions on business, more certainty after the election and hopes for more fiscal stimulus.

The composite index of future activity increased to the highest level sinceMay 2018.

The IHSMarkit’s flash services PMI rose by 1.4 points to 56 in October, also a 20- month high and a gauge of business expectations jumped by the most in more than a decade. The group’s manufacturing index edged up to 53.3, the fourthstraight month of expansion and the highest since January 2019. Measures of employment growth moderated at both service providers andmanufacturers.