Goldman Sachs: US analyst index falls below 50 in October as new orders weaken, diverging from other surveys

What was the main drag on the index in October?

The Goldman Sachs Analyst Index (GSAI) fell 6.5 points from the previous month to 49.1 in October, dropping below 50 for the first time since April 2025. The index covers manufacturing and services; Goldman Sachs believes a reading around 50 is closer to trend economic growth than to zero growth.
The new orders component plunged 33.0 points to 29.5, its lowest since May 2020; the employment component fell 1.6 points to 50.6. Weak new orders contrasted with an improvement in shipments during the month: the sales and shipments component rose 17.3 points to 58.1.
The inventories component fell 13.2 points to 36.2, but the orders-minus-inventories spread still declined 19.8 points to negative 6.7, indicating that the survey reading for orders relative to inventories was also weakening.

Other business activity surveys were generally stronger. Goldman Sachs’ manufacturing survey tracker rose 0.2 points to 56.1 in October, while its services measure rose 0.6 points to 53.8, moving in the opposite direction to the GSAI.
Rising prices lifted some survey readings: price changes affect the indices when respondents consider orders and shipments in dollar terms rather than actual quantities. Goldman Sachs believes the survey trackers remain robust after adjusting for this nominal price bias.
The GSAI components for raw material prices, wages and output prices rose to 80.0, 71.4 and 81.8, respectively; sales price components in other business surveys rose markedly in manufacturing and more moderately in services.

In a special Federal Reserve Bank of Philadelphia survey, 52% of manufacturers and 44% of service firms expected total capital spending in 2027 to exceed that in 2026; another 48% and 30% of firms, respectively, expected it to remain roughly unchanged.
Across all capital spending categories, more surveyed manufacturers expected increases than decreases. Service firms also expected a net increase in software and hardware spending, but a net decrease in energy-saving investment and spending on buildings and facilities.

Analysts surveyed by Goldman Sachs most frequently cited risks related to the war with Iran, including continued increases in input costs and supply disruptions; risks related to AI spending and adoption also received considerable attention.
Slowing demand or discretionary spending and high interest rates were also mentioned, but less frequently.