U.S. Services Sector Remains in Growth Mode, Hints of Deceleration
The S&P Global Services sector PMI came in as expected and remained in expansion territory. It came in at 52.5 in December, slightly lower than the 54.1 posted in November. As we try to flesh out seasonality (the impact of the holidays and typical shifts between November and December), we see it typically dips during this period. But historically, it has averaged 53.8 (compared with 52.5). It was modestly lower than historical averages but reasonable from an economic perspective.
Chris Williamson, the Chief Business Economist at S&P Global, mentioned that:
Confidence has been dampened principally by uncertainty over government policy and the broader economic outlook, with tariffs and affordability featuring as common threads throughout companies’ more cautious views on their prospects…These affordability worries are underscored by companies reporting an increased impact of tariffs on both input costs and selling prices in December, suggesting we could see the unwelcome combination of slower economic growth and stubbornly high inflation at the start of the new year.
Business Cycle Indicators – An Early Warning System for Cycle Changes
We use the following indicators as early warning devices; when they move, it typically signals a change in the current business cycle. We will continue to update these weekly as new data become available, and specific, deeper-dive commentary on these factors will be included in the written portion of the briefing as changes occur.
