What's going on?

Key US survey data seen as a good indicator of how well the economy is performing was released on Wednesday � and it looked pretty darn good, all things considered. The same couldn�t be said for Europe, however…

What does this mean?

Both US manufacturing and services activity were better than expected in October, with the service sector (covering everything from truck driving to theatre direction) particularly strong. Business owners cited better economic conditions and new work coming in as the main reasons for the uptick. What�s more, businesses were pretty upbeat about the future too.


It looks like there�s plenty of unfinished business on the go (great for future work and jobs), but the bad news is that costs are also ticking up, thanks in part to the trade wars. For businesses keen to balance to books, this could mean that wages may not grow quite as quickly as hoped.

Why should I care?

For markets: The US is still set for interest rate rises.

American business is ticking along nicely. Combined with low unemployment, that means rate rises are still likely � even if they�re not particularly popular with the president (tweet this). If wage growth does start to falter, though, rate rises could turn ugly for US consumers and growth overall � with household debt at an all-time high, an unmatched increase in interest payments would squeeze incomes and spending in the economy.

The bigger picture: Europe�s looking a little under the weather.

Similar data out of Europe on Wednesday painted a less rosy picture, with Germany disappointing again after a weak August. Manufacturing outlook worsened due to trade wars (Chinese motorists are ordering less from Germany), while French services provided one of the few bright spots as financial firms begin ramping up their presence there ahead of le Brexit. With the future also looking foggy for European business owners, they may not produce as much stuff � which would limit growth and, potentially, European interest rate rises.