In December, US private-sector output experienced its most significant growth since March 2022, despite a notable contraction in manufacturing. The flash purchasing managers' index from S&P Global indicated that the composite output index climbed to 56.6 this month from 54.9 in November, surpassing the 55.1 consensus from a Bloomberg survey.
This 50-point threshold distinguishes expansion from contraction. Although the index has shown growth since February 2023, activity has markedly accelerated during the latter half of 2024. Service sector output surged to 58.5 in December, representing its fastest rate of growth since October 2021, an increase from 56.1 the previous month.
Conversely, manufacturing PMI fell to a three-month low of 48.3 from 49.7, with Wall Street anticipating readings of 55.8 and 49.5, respectively. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, remarked, "Business is booming in the US services economy, where output is growing at the sharpest rate since the reopening of the economy from COVID lockdowns in 2021." He added, "It's a different picture in manufacturing, however, where output is falling sharply and at an increased rate, in part due to weak export demand." The total number of new orders in the private sector rose at the "sharpest rate" since April 2022, bolstered by the service sector, S&P Global reported. Fortunately, outlooks have improved, and private-sector employment recorded its first increase in five months due to job gains in both services and manufacturing areas, as highlighted by S&P Global. Optimism regarding forward output escalated in December to its highest level since May 2022, likely reflecting a "clearing of uncertainty" after the US election.
Survey respondents noted "expectations of a more business-friendly administration under the Trump presidency, particularly concerning looser regulations and increased protectionism," according to the company. Despite this optimism, some of the buoyancy observed post-election within the manufacturing sector has been tempered by concerns over tariffs and the potential inflationary effects stemming from the higher costs of imported materials," Williamson concluded. Price: 505.34, Change: -0.42, Percent Change: -0.08.