(Dec 16): US business activity expanded in December at the slowest pace in six months, while a measure of input prices jumped to a more than three-year high.
The S&P Global flash December composite output index fell 1.2 points to 53, data released Tuesday showed. Figures above 50 indicate expansion. The composite prices-paid gauge rose nearly three points to 64.1.
“A key concern is rising costs, with inflation jumping sharply to its highest since November 2022, which fed through to one of the steepest increases in selling charges for the past three years,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement.
“Higher prices are again being widely blamed on tariffs, with an initial impact on manufacturing now increasingly spilling over to services to broaden the affordability problem,” he said.
The group's measure of input costs for service providers also climbed to the highest since November 2022. An index of prices charged showed the fastest growth since August 2022.
The pickup in price pressures along with a slowdown in growth of business activity highlights the challenge faced by the Federal Reserve. While policymakers have lowered interest rates at their last three meetings to shore up a softening job market, a number of officials remain concerned about lingering inflation.
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The S&P Global composite employment index dropped 1.4 points, moving closer to stagnation. A gauge of services employment was the weakest since April. Job growth was constrained by concerns about costs, sluggish demand and economic uncertainty, the report showed.
A composite gauge of orders illustrated the slowest growth since bookings shrank in April 2024. Growth of new business in the services sector was also the weakest since 2024.
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