Economic Buzz: US business activity growth weakens in December as inflation rates pick up

The US service sector continued to expand at the end of 2025, according to the latest PMI data from S&P Global. However, with new business inflows rising to the weakest degree in over a year-and-a-half, growth of activity faltered and was the lowest since last April.

Confidence in the outlook also weakened, whilst employment volumes stagnated, failing to rise for the first time since last February.

Tariffs and higher labor-related costs meanwhile drove typical operating expenses up to the greatest degree since last May. Firms passed on their higher costs by raising selling prices at a quicker pace.

The headline S&P Global US Services PMI Business Activity Index registered 52.5 in December to signal solid growth of activity and extending the current period of continuous expansion to just under three years.

However, the index was down from 54.1 in November and thereby signaling the slowest growth for eight months.

Demand conditions cooled somewhat in December, with growth of new work faltering. Overall, inflows of new business rose only marginally and to the weakest degree in 20 months.

Meanwhile, employment volumes fell negligibly in December, ending a nine-month sequence of continuous growth. Expectations about the year ahead were again positive overall during December, albeit a little softer than in November and therefore still below trend.

The S&P Global US Composite PMI recorded 52.7 in December, down from 54.2 in the previous month. Growth rates slowed in both manufacturing and service sectors. Only a marginal rise in new order volumes was recorded, the slowest in 20 months, whilst employment was also just slightly higher.

Confidence in the future was lower than in November. Price pressures meanwhile intensified, with cost inflation the highest since last May. Selling prices rose markedly in response.

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