There's reason to believe the private sector economy is actually doing pretty well

Whatever else in the economic firmament might be giving you agita — stocks, bonds, oil prices, uncertainty and volatility in all of the above — the private-sector economy is actually doing, “really very well, thank you.”

S&P Global Market Intelligence’s purchasing managers' index, which is based on a survey of manufacturing and service-sector companies, signaled strong, sustained economic growth in October. It also reported a pick-up in hiring plans and solid new-order flow and production levels.

There’s still one big warning sign flashing red: inflation. The prices for the stuff companies buy and sell keep surging higher.

Still, the growth of U.S. business activity remained near a five-year high in October, said economist Chris Williamson at S&P Global Market Intelligence.

“This is another really strong report in terms of manufacturing growth, accompanied by service-sector growth as well, it’s a broad-based upturn that we’ve got,” he said.

It’s a welcome change from the past few years for manufacturing, which was hit hard by tariffs and the Trump administration’s trade wars.

“For so long in manufacturing we saw dormant activity, and that has picked up quite nicely, said Nationwide Chief Economist Kathy Bostjancic.

She has two letters for what’s driving this: “AI. [It’s] boosting both manufacturing and construction. We know the construction sector could use that because residential housing continues to be in the dumpster.”

Still, rampant price growth is not so favorable for the economy, said Williamson at S&P. “We’ve got prices charged for goods and services rising at the fastest rate for four years, well above the [Federal Reserve’s] target,” he said.

So far though, corporate America is rolling with it.

“Companies are seeing their costs increase — notably fuel and energy — but they’re able to pass that on to their customers,” Williamson said, without squeezing their profit margins

And, without driving consumers away, said Dan North, senior economist at credit-insurer Allianz Trade.

“Consumers [have] been driving the economy, despite terrible sentiment, and disposable personal income slowing down pretty sharply,” he said.

North said the consumers who drive the most spending — the top 20% by income — aren’t really daunted by high prices, because of all the wealth they’ve banked from housing and the stock market.