US Business Activity Expands at Slowest Pace in Nine Months on Services Sector Pullback
The S&P Global flash composite index for services and manufacturers declined 3 points to 52.4 in January, indicating a slowdown in business activity growth. Despite the moderation, businesses remain optimistic about future demand, with expectations of pro-business policies boosting employment measures.
Services Sector
The services activity gauge fell 4 points, retreating from the March 2022 high recorded in December.
Manufacturing Sector
The manufacturing index returned to expansion territory, showing growth in output, orders, and employment on improved domestic demand.
Optimism and Inflation
Despite concerns about tariffs and supply chain disruptions, survey respondents expressed optimism about regulatory reform, tax cuts, and the overall economy. However, inflationary pressures intensified, with composite prices paid for materials reaching a four-month high. Output prices and prices charged by service providers also rose, indicating continued inflation.
Future Outlook
Sustained business confidence suggests the slowdown in growth may be temporary. Hiring growth, driven by improved business outlook, has been a positive indicator.
Data Collection
Data for the survey was collected from January 9-23, 2023.