- 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.
