The election of Donald Trump to a second presidential term is fueling a wave of economic optimism, with business confidence reaching its highest level in 18 months. S&P Global’s latest data reveals accelerated growth across the services sector, underscoring the positive impact of Trump’s anticipated pro-business policies.
The S&P Global U.S. Services PMI Business Activity Index climbed for a second straight month in December, hitting 56.8—a 33-month high. This marked a continuation of the sector’s eight-month growth streak. Businesses reported a surge in new orders and output, attributing the momentum to greater customer confidence following November’s election results. Employment in the sector increased for the first time in five months, reflecting renewed optimism about economic stability and growth prospects.
International demand contributed to the uptick, with new business from abroad rising, albeit at a slower pace compared to November. The increased workload led to a third accumulation of backlogs in four months, prompting modest hiring among service providers. However, inflation pressures eased, with December marking the slowest rate of input cost increases since February, though costs remain higher than pre-pandemic levels.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, highlighted the role of policy expectations in driving the surge. He pointed to optimism surrounding tax reforms, deregulation, and protectionist measures such as tariffs as key factors boosting business sentiment. Williamson noted that these policies are expected to create a more favorable environment for expansion, particularly in the services sector, which continues to outpace manufacturing.
The economy’s robust performance in the fourth quarter follows a 3.1% GDP growth rate in the third quarter, positioning the U.S. for a strong start in 2025. However, the Federal Reserve may face challenges as it balances the need to support growth with controlling inflation. Businesses remain hopeful that Congress will move quickly to preserve Trump’s pro-growth tax policies from his first term while expanding reforms.
The data points to sustained optimism heading into 2025, driven by the Trump administration’s focus on fostering a business-friendly environment. Economic growth and the ability to navigate inflationary pressures will likely be central to the policy debate in the coming months.
