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S&P
Global said on Friday that its flash U.S. Composite PMI Output
Index, which tracks the manufacturing and services sectors,
increased to a five-month high of 51.0 this month from 50.7 in
November. A reading above 50 indicates expansion in the private
sector.
All the improvement came from the services sector, with
manufacturing activity declining further.
The survey followed upbeat news on the labor market in November.
The holiday shopping season also got off to a strong start, with
retail sales outperforming expectations in November, data showed
on Thursday.
The run of better-than-expected data prompted the Atlanta
Federal Reserve to boost its gross domestic product growth
estimate to a 2.6% annualized rate from a 1.2% pace. The economy
accelerated at a 5.2% rate in the third quarter.
"The early PMI data indicate that the U.S. economy picked up a
little momentum in December," said Chris Williamson, chief
business economist at S&P Global Market Intelligence. "Looser
financial conditions have helped boost demand ... and have also
helped lift future output expectations higher."
Economists do not expect a recession next year. The Federal
Reserve held interest rates steady on Wednesday and signaled in
new economic projections that the historic tightening of
monetary policy engineered over the last two years is at an end
and lower borrowing costs are coming in 2024.
The S&P Global survey's measure of new orders received by
private businesses increased to 51.1 this month from 50.6 in
November. Its gauge of private sector employment climbed to 51.6
from 50.1.
But with demand perking up, inflation crept higher. A measure of
prices paid by businesses for inputs increased to 57.7 from 55.8
last month. Relative to last year, businesses are, however, not
having great success passing on the increased costs to
consumers.
Manufacturing continued to struggle, with the survey's flash
manufacturing PMI falling to 48.2 this month amid declining
orders from 49.4 in November. Its flash services sector PMI rose
to 51.3 from 50.8 last month. The new orders, employment and
input prices sub-components all rose.
(Reporting by Lucia Mutikani)
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