(Dec 16): Activity at US service providers is expanding at the fastest pace since October 2021, providing momentum for the economy even as the downturn in manufacturing worsens.

The S&P Global flash December index for service providers increased to 58.5 from 56.1. A figure exceeding 50 indicates expansion. The group’s composite index for future output jumped 3.3 points to 71.1, the highest since May 2022.

The data show a growing divergence in the economy, characterised by solid growth in services and a further deterioration in manufacturing. Factory output and orders contracted at faster rates as input prices accelerated on concerns about potential tariffs from the Trump administration.

“Encouragingly, confidence in the 12-month outlook has lifted to a 2 1/2-year high, suggesting the robust economic upturn will persist into the new year and could also become more broad-based by sector,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement.

“However, some of the high spirits seen after the election in the manufacturing sector have been checked over concerns surrounding tariffs and the potential impact on inflation resulting from the higher cost of imported materials,” Williamson said.

Separate data from the Federal Reserve Bank of New York showed the biggest decline in an index of Empire State manufacturing activity since May 2023 after surging in November to an almost three-year high.

An index of prices paid by manufacturers for materials jumped this month by nearly seven points to 59.1, the highest since late 2022. At the same time, input costs incurred by service providers grew at the slowest pace in more than four years, restrained by weaker wage growth.

The pickup in activity at service providers included the strongest growth of new business since March 2022. A measure of the outlook for services activity improved to a more than two-year high. For manufacturers, a similar gauge remained elevated in anticipation of more business-friendly policies from the Trump administration.

Still, a measure of factory order backlogs contracted at the fastest pace since the early months of the pandemic.

Data for the survey were collected Dec 5-13.

Uploaded by Magessan Varatharaja