Payroll growth is solid this month, but the US private-sector rate of job creation decelerated to its slowest since June 2017, according to the IHS Markit Flash US Purchasing Managers Index. Services industries reported that tight labor market conditions had held back recruitment plans.

“The flash PMI surveys indicate that the pace of economic growth gained momentum again in October after having been subdued mainly by adverse weather in September. The headline PMI is running at a level broadly consistent with the economy growing at an annualized rate of 2.5%, boding well for another robust quarter of growth,” said Chris Williamson, chief business economist at IHS Markit.

“The survey still suggests, however, that growth is being constrained by a lack of capacity, with skill shortages widely reported and supplier delays remaining commonplace,” Williamson said. “Companies consequently reported yet another rise in backlogs of work as, measured overall, order book inflows once again exceeded output growth.”

Findings released by IHS Markit today include:

• Flash US Composite Output Index rose to a three-month high of 54.8 in October from 53.9 in September.
• Flash US Services Business Activity Index rose to a two-month high of 54.7 in October from 53.5 in September.
• Flash US Manufacturing PMI rose to a five-month high of 55.9 in October from 55.6 in September.
• Flash US Manufacturing Output Index fell to 55.2 in October, a two-month low, from 55.8 in September.

Williamson also noted the domestic economy remained the main driver of demand, with exports stagnating amid growing signs of trade being subdued by tariffs.