January 26, 2025
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Manufacturing Rebounds While Services Slow: US Flash PMI Reveals Mixed January Growth

Manufacturing rebounds with PMI at 50.1, while services slow sharply to 52.8. Inflation rises, keeping Fed policy in focus for traders.”, — write: www.fxempire.com

Services Sector Growth Slows Sharply The services sector maintained its expansion for a 24th straight month, but the pace slowed significantly. The Services PMI fell to 52.8, its lowest level since April, as new business inflows decelerated and export orders contracted for the first time since June. While optimism about future growth remains elevated, adverse weather and rising costs weighed on January’s performance.

Inflation Pressures Intensify Across Sectors Both manufacturing and services faced accelerating inflation in January, with input costs and selling prices rising at the fastest pace in four months. Manufacturers cited supplier-driven material price hikes, while service providers reported higher staff costs and increased material prices. These pressures led to higher consumer prices, with goods inflation reaching a ten-month high and service prices rising at their fastest pace since September.

Composite PMI Falls as Growth Moderates The S&P Global Flash US PMI Composite Output Index, which aggregates data from both manufacturing and services, dropped to 52.4 from December’s 55.4—a nine-month low. The report underscores a slowdown in overall business activity, with moderating demand in services offsetting marginal gains in manufacturing.

Market Implications and Forecast Manufacturing’s modest recovery signals a potential bullish outlook for industrial sectors, but traders should note the rising inflation pressures that could prompt hawkish policy from the Federal Reserve. The service sector’s slowdown highlights vulnerabilities, especially in consumer-facing industries. Overall, traders should remain cautious, focusing on inflation metrics and employment data for cues on near-term market direction.

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