Meanwhile, In Good News…

And now, for some good news.

Business activity in the US is proceeding at the briskest pace since February of 2019, according to the flash read on IHS Markit’s composite PMI, out Friday.

At 55.5, the gauge printed well ahead of estimates and up from September. In stark contrast to the situation in Europe, the services sector is behind the improvement.

“US output growth regained growth momentum in October, as business activity rose at the fastest rate for 20 months and business optimism improved markedly,” IHS Markit said, in the color accompanying the release. “The upturn was largely driven by service providers, though manufacturing firms also reported a further solid increase in production.”

This comes as public health officials continue to warn that the country may be in for a daunting winter, as virus caseloads grow.

The White House and most Republican governors have resisted the reimposition of COVID containment protocols, at least to the extent they might slow economic activity. That’s been good for the services sector, which was obviously waylaid during March and April.

And yet the trade off between economic activity and lives represents a vexing quandary for politicians. The sane approach is to simply say that the issue isn’t black and white — that we can keep the economy open while exercising common sense and employing best practices. But for many Republicans, this has become an “all or nothing” issue, even if they don’t say as much.

During Thursday evening’s final US presidential debate, Donald Trump insisted, without evidence, that suicides and drug usage are surging due to lockdowns. As ever, I would note that while some such evidence does exist, it is not conclusive and to the extent it is, there is no proof whatsoever to support the contention that the “solution is worse than the problem,” as some are keen to suggest.

In any event, IHS Markit’s Chris Williamson said Friday that “the US economy looks to have started the fourth quarter on a strong footing, with business activity growing at a rate not seen since early 2019.” He noted that the service sector is “adapt[ing] to life with COVID, while manufacturing continued to report solid growth amid rising demand from households and businesses.”

Still, hiring and new order inflows remain sluggish, something Williamson attributes in part to election uncertainty.

Meanwhile, the latest CPB world trade is out. For those who may be new to the series, CPB publishes the data each month on behalf of the European Commission. It comes on a two-month lag.

In August, world trade grew 2.5%, down from 5% in July. Trade (by volume) has now expanded for three consecutive months.

On year, the world is still mired in a deep downturn, though.

As CPB noted on Friday, “in total, world trade is now 3% to 4% below the pre-corona level.” The 3-month/3-month change (“momentum” as it’s dubbed) flipped positive for the first time in 2020.