US business activity moderates as growth in services cools

US BUSINESS activity is expanding at the slowest pace in nine months on a pullback in the pace of growth at services providers.

The S&P Global flash January composite index for services and manufacturers decreased three points to 52.4. Figures above 50 indicate expansion. The group’s services activity gauge retreated four points after climbing a month earlier to the highest level since March 2022.

Despite the moderation, businesses continued to express optimism about future demand, which matched the highest level since May 2022. Spurred by expectations of more pro-business policies from the Trump administration, the upbeat outlook helped spark increases in measures of employment, with the composite gauge registering the strongest growth since mid-2022.

“Although output growth slowed slightly in January, sustained confidence suggests that this slowdown might be short-lived,’’ Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement. “Especially encouraging is the upturn in hiring that has been fuelled by the improved business outlook.’’

The S&P Global index of manufacturing moved back into expansion territory as output, orders and employment showed growth on improved domestic demand.

While some companies indicated concerns about tariffs and impacts on supply chains and sales, survey respondents were upbeat about the prospects for regulatory reform, lower taxes and general optimism about the economy.

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At the same time, inflationary pressures showed signs of mounting. The composite measure of prices paid for materials climbed to a four-month high and remains elevated. The group’s index of prices received also rose to the highest since September.

Output prices at manufacturers rose to an almost one-year high, while a gauge of prices charged by service providers advanced to a four-month high.

Data for the survey was collected from Jan 9 to 23.