Dec 16 (Reuters) – U.S. business activity growth slowed in December to the weakest pace since June, with new orders sliding for both manufacturers and service providers to cap a year of volatility and uncertainty for the American economy, survey data showed on Tuesday.
S&P Global said its “flash” – or preliminary – composite purchasing manager index slipped to 53.0 this month from a final reading of 54.2 in November. Readings above 50 indicate activity is expanding.
The data showed the smallest rise in incoming new business in 20 months, and new orders for goods fell for the first time in a year.
S&P’s index tracking services activity, which accounts for two-thirds of U.S. economic output, slid to 52.9 in December – also a six-month low – from 54.1 in November. Its manufacturing gauge fell to 51.8 – the lowest since July – from 52.2 in November. Both readings were weaker than estimates from economists polled by Reuters.
“The flash PMI data for December suggest that the recent economic growth spurt is losing momentum,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement. “With new sales growth waning especially sharply in the lead up to the holiday season, economic activity may soften further as we head into 2026.”
The U.S. economy has had a particularly choppy ride through 2025 as President Donald Trump’s return to the White House in January was quickly followed by major policy changes, including immigration crackdowns that have weighed on the workforce and waves of new tariffs that upended international trade and raised goods prices. A record-long federal government shutdown in October and November added to the uncertainty and shut off the flow of key data about the economy.
U.S. gross domestic product contracted in the first quarter because of a rush of imports to beat the tariffs and then rebounded in the second quarter as that was reversed. A delayed GDP report for the third quarter due just before Christmas is expected to show the economy continued growing at more than a 3% annualized pace up to the time of the start of the shutdown. Fourth-quarter data will not be reported until early next year.
“Although the survey data point to annualized GDP expansion of about 2.5% over the fourth quarter, growth has now slowed for two months,” Williamson said.
The S&P report will ad only marginal clarity about the real state of the economy for Federal Reserve policymakers, who cut interest rates three times in the later part of 2025 on concerns about risks to employment growth but had little hard data about the job market to back it up because of the shutdown.
Job growth as measured by the S&P data “was commonly constrained by concerns over costs, lackluster demand and uncertainty over the economic outlook,” S&P said. “Some companies also continued to report labor shortages.”
S&P’s gauge of input prices shot to the highest in roughly three years led by a surge in costs reported by services firms, providing those Fed officials wary of inflation yet another reason to be hesitant about approving more rate cuts.
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