Services "booming," manufacturing still contracting

The December S&P Global PMI for the US gained 1.7 pts m/o/m to 56.6 with all the strength coming from services. This component rose to 58.5 from 56.1 while manufacturing remains under continued pressure at 48.3 vs 49.7 in November.

The election was a catalyst in the boost but in two different ways. It certainly helped the services side with hopes for “looser regulation” but with manufacturing, “The goods producing sector reported a slight pull back in future expectations, in part reflecting worries over the impact of tariffs and inflation.”

With employment, the service sector saw the first rise since July and it was above 50 for a 2^nd month in manufacturing.

With prices, there was “a jump in input cost inflation” though “selling prices rose at a rate unchanged on November’s pace, thereby running slightly above the pre-pandemic long-run average.” With services there was a “slowing in cost growth” to a 4 ½ yr low. “While lower cost growth in services was in part due to weaker wage growth, higher materials prices in manufacturing were commonly linked to supplier-related price hikes and increased shipping rates.”