October’s Flash PMIs Had More Treats Than Tricks

October has had no shortage of political stories in the financial publications we monitor. Nonstop chatter over the UK’s November Budget. Turbulent French and Japanese politics. An ongoing US government shutdown.^[i] But against that topsy-turvy political backdrop, the latest business surveys continue showing plenty of growth—an overlooked positive suggesting the global economy remains in better shape than appreciated, in our view.

As Exhibit 1 displays, data firm S&P Global’s preliminary October purchasing managers’ indexes (PMIs) showed business activity rose in most major developed economies this month. (Readings above 50 indicate expansion.) PMIs are business surveys that report the breadth—not the magnitude—of growth or contraction, so they won’t shed much insight about how much gross domestic product (GDP, a government-produced measure of economic output) grew or shrank. But we still find PMIs a useful snapshot of business conditions in countries’ services and manufacturing sectors.

Exhibit 1: October and September PMIs

Source: FactSet, as of 24/10/2025.

Now, October’s results weren’t universally growthy, as Japan and France’s weakened from September. France in particular has been in a soft patch for a while. Its composite PMI (which aggregates manufacturing and services) has been below 50 for 14 straight months through October, topping 50 just twice in the past two years.^[ii] This month, some respondents blamed “a volatile domestic political situation” for “reduced client spending appetites.”^[iii] Perhaps that is true to some degree—we saw similar claims in financial coverage we followed last summer after President Emmanuel Macron called a surprise snap election.

But according to our studies of business executives’ commentary, volatile politics can also be a convenient scapegoat for weaker economic activity in general. It may make sense intuitively that an uncertainty-inducing political development dampens consumers’ willingness to spend or businesses’ risk appetite to invest. However, our research shows that how folks feel in the moment has little connection with their consumption decisions—and therefore broader economic growth. Moreover, again, PMIs are breadth measures. If the minority of French firms that grew outpaced those that contracted, you can still get overall GDP growth. So it has been in seven of the last eight quarters for French GDP, coinciding with PMIs’ soft streak.^[iv]

Beyond the soft patches, business activity picked up in much of the developed world. For instance, don’t look now, but Europe’s largest economy may be shedding the proverbial Sick Man of Europe moniker. Yes, manufacturing remains mired in contraction, though fewer factories are reporting declines.^[v] But though manufacturing weakness tends to get eyeballs given Germany’s reputation as an industrial powerhouse, services (the bulk of German GDP) has been offsetting heavy industry’s struggles.^[vi] Germany’s composite PMI rose for a fifth-straight month—its longest expansionary streak since early 2023—and registered a 29-month high in October despite manufacturing’s ongoing weakness.^[vii] That overlooked resilience applies to the rest of the eurozone, too. According to S&P Global, “The euro area excluding Germany and France posted the fastest rise in activity for two-and-a-half years.”^[viii]

In the UK, economic activity rose amidst nonstop speculation that Chancellor of the Exchequer Rachel Reeves’s November Budget will hamstring growth. Maybe, but our review of recent history doesn’t support that thesis. Go back to last year’s Budget, which featured minimum wage and employer NIC hikes, effective this April. Echoing the present, we read many analyses arguing the Chancellor’s measures would negatively affect services businesses in particular, leading to layoffs and weaker growth.^[ix] Indeed, UK services PMI dipped below 50 in April when those changes took effect—but since then, services have continued growing.^[x] If last year’s Budget provisions were supposed to hit business activity, we think the UK services PMI indicates the effect was, at most, fleeting.

Across the Atlantic in the US, October’s flash PMIs were the strongest in a couple months, signalling a solid start to Q4.^[xi] Notably, though respondents’ input costs continue to rise sharply (due largely to tariffs), most refrained from passing them on to customers for now, as they don’t want to lose market share.^[xii] That said, we have observed some divergence between S&P Global’s US PMI and the Institute for Supply Management’s (ISM’s) version, whose findings are a bit softer relative to S&P’s.^[xiii] Our research finds that divergence between the two PMI measures isn’t abnormal—the surveys poll differing businesses (in number and specific firms)—but we think it is worth monitoring alongside other US economic data.

Despite US tariffs being broadly in effect, the global economy continues chugging along—countering fears trade levies would upend commerce. We aren’t saying tariffs are positive; they are economic negatives, in our view. Our research shows duties add friction to trade and end up hurting the tariff imposer more than the tariff target. But as Exhibit 2 illustrates, global economic activity has remained resilient.

Exhibit 2: JPMorgan Global Composite PMI Over the Past Three Years

Source: S&P Global, as of 24/10/2025. October 2022 – September 2025 (the latest available data).

We have seen some argue tariffs’ economic damage has been delayed by preemptive orders and the weakness will arrive eventually. Sure, many businesses worldwide did some pre-tariff frontrunning, but our research suggests much of that already happened. If a deep economic pothole were to occur, we should theoretically be in it now. But PMIs’ overall growth suggests to us the pothole was shorter and shallower than many economists we follow projected. If tough times were around the corner, why did eurozone PMI new orders pick up at their fastest pace in two-and-a-half years?^[xiv] America and the UK saw an upturn in new orders, too.^[xv] Today’s new orders reflect tomorrow’s production, and you wouldn’t expect to see growth here if companies were planning to pull back soon.

Markets realised this better-than-appreciated reality back in April, but now, more folks are starting to notice, too.^[xvi] That optimism is rational and bullish, in our view.