US December S&P Global final services PMI 56.8 vs 58.5 prelim

• Prelim was 58.5
• Prior was 56.1
• Composite 55.4 vs 56.6 prelim
• Prior composite was 54.9

Details:

• Employment increases for first time in 5 months
• Business confidence at 18-month high
• Cost inflation eases to 11-month low

This is still the best reading since March 2022, though not as good as it initially looked.

Chris Williamson, Chief Business Economist at S&P Global
Market Intelligence

“The US economy ended 2024 on a high according to the
latest business surveys. Business activity in the vast services
economy surged higher in the closing month of 2024 on fuller
order books and rising optimism about prospects for the year
ahead.

“Expectations of faster growth in the new year are based
the anticipation of more business-friendly policies from the
incoming Trump administration, including favorable tax and
regulatory environments alongside protectionism via tariffs.

“The improved performance of the service sector has more
than offset a continued drag on the economy from the
manufacturing sector, meaning the survey data point to
another robust expansion of the economy in the fourth quarter
after the 3.1% GDP growth seen in the third quarter.

“The strong service sector PMI reading for December sets
the US economy up for a good start to 2025 but, with growth
as strong as this, it’s understandable that policymakers are
taking a more cautious approach to lowering interest rates.
However, a key focus in the coming months will be the potential
vulnerability of the economy to any major change in the interest
rate outlook, especially as financial services activity has been
an important engine of growth in late 2024, partly on the
anticipation of a further lowering of borrowing costs.”

The slip could be from a more-hawkish Fed and rising interest rates or the political glow from the election could already be fading.

This article was written by Adam Button at www.forexlive.com.