Services Sector Expands at Slowest Pace Since April as Outlook Weakens, S&P Global Says

12:44 PM EST, 01/06/2026 (MT Newswires) -- The US services sector grew last month at the slowest pace since April amid weak business inflows and employment volumes, while the outlook deteriorated, S&P Global (SPGI) said Tuesday.

The firm's services purchasing managers' index fell to 52.5 in December from 54.1 the previous month, representing the slowest growth for eight months.

"Business activity continued to expand in December, rounding off another quarter of robust growth, but the resilience of the US economy is showing signs of cracking," S&P Global Market Intelligence Chief Business Economist Chris Williamson said. "New business placed at services providers showed the smallest rise in some 20 months."

Employment volumes dropped "negligibly" last month, snapping a nine-month growth streak, the data provider said. Demand conditions eased in December, while new export business fell for the second time in the last three months, the survey showed.

Business activity in the services sector slowed in response to order books concerns, while the number of firms reducing their workforce surpassed those reporting higher employment for the first time since February, according to Williamson.

Input price inflation accelerated to a seven-month high in December and remained well above its historical trend level. Service providers continued to cite tariffs as a driver of higher costs, as well as a general increase in supplier charges. Overall, the inflation rate picked up to its highest level since August, as firms sought to counter margin impacts from higher operating expenses, according to the report.

"We also enter 2026 with future output expectations running much lower than seen at the start of 2025, fueling concerns that December's slowdown and job market malaise could spill over into the new year," Williamson said. "However, there is an expectation among many companies that lower interest rates and government policy will start to boost demand again as the new year proceeds."

Last week, S&P Global (SPGI) said US manufacturing output growth decelerated in December as new orders fell for the first time in a year, while firms' outlook waned slightly. On Monday, the Institute for Supply Management said economic activity in the US manufacturing sector contracted for a 10th straight month in December, reaching its lowest reading of 2025.

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