US services activity expands at fastest pace since Covid reopening, S&P says

(Sharecast News) - Services sector activity in the States picked up to its quickest pace since the economy reopened after Covid, the results of a closely followed survey showed. "The service sector expansion is helping drive overall growth in the economy to its fastest for nearly three years, consistent with GDP rising at an annualized rate of just over 3% in December," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

S&P Global's services sector Purchasing Managers' Index increased from a reading of 56.1 for November to 58.5 in December (consensus: 55.7).

A rival factory PMI however slipped from 49.7 to 48.3 (consensus: 49.4).

A composite index tracking output from both sectors meanwhile rose from 54.9 to 56.6.

"Encouragingly, confidence in the 12-month outlook has lifted to a two-and-a-half year high, suggesting the robust economic upturn will persist into the new year and could also become more broad-based by sector," Williamson added.

"However, some of the high spirits seen after the election in the manufacturing sector have been checked over concerns surrounding tariffs and the potential impact on inflation resulting from the higher cost of imported materials."

Indeed, S&P noted how raw materials' prices had "spiked sharply" during the final month of 2024, as suppliers tried to front run threatened protectionist measures in the new year.