10/25/2022 – MetroIntelligence Economic Update by P. DUFFY

MetroIntelligence Economic Update by P. DUFFY


October U.S. output index falls to 47.3, largely due to a drop in services

The headline Flash US PMI Composite Output Index registered 47.3 in October, down from 49.5 in September. With the exception of the initial pandemic period, the rate of decrease was the second-fastest since 2009. The fall in business activity was solid and stronger than that seen in September, as service providers signaled a quicker decline. Manufacturers, on the other hand, saw output rise for the second month running, albeit only marginally.


Consumer sentiment index improves 2.0 percent in September, down 16.6 percent year-on-year

Consumer sentiment is essentially unchanged at 1.2 index points above September, in spite of a 23% improvement in current buying conditions for durables owing to an easing in supply constraints. Sentiment is now 9.8 points above the all-time low reached in June, but this improvement remains tentative, as the expectations index declined by 3% from last month. Continued uncertainty over the future trajectory of prices, economies, and financial markets around the world indicate a bumpy road ahead for consumers.


Year-ahead inflation expectations by consumers rise to 5.1 percent

The median expected year-ahead inflation rate rose to 5.1%, with increases reported across age, income, and education. Last month, long run inflation expectations fell below the narrow 2.9-3.1% range for the first time since July 2021, but since then expectations have returned to that range at 2.9%. After 3 months of expecting minimal increases in gas prices in the year ahead, both short and longer run expectations rebounded in October.


New home pending sales up 5.9 in September but down 25.9 percent year-on-year

The New Home Pending Sales Index came in at 113.2 in September, representing a 25.9% decline from the same month last year. The index is currently 35.0% below cycle highs. On a month-over-month basis, seasonally adjusted new home sales increased 5.9%. 53.7% of communities now offer average incentives of $10,169. Prices rose 12.7% for entry-level to $340,369, 10.8% for move-up to $529,050, and 8.7% for high-end homes to $906,157.