US January S&P Global flash services PMI 52.8 vs 56.5 expected | Forexlive

• Lowest services reading since April
• Prior was 56.8
• Manufacturing 50.1 vs 49.7 expected
• Prior manufacturing was 49.4
• Composite PMI 52.4 vs 55.4 prior
• Service sector future confidence lost some of the shine from
  December’s one-and-a-half year high, but remained the
  second-highest recorded over the past year
• Service sector jobs were added at the sharpest
  rate for 30 months
• Composite input costs and average selling prices rose at the fastest rates
  for four months

The PMIs out of Europe today were stronger, helping to boost the euro and pound. For the US, that’s a fairly big drop and kocks it back to Q2 levels. It also runs against the market narrative of a post-election sentiment boom. There is some commentary about tariffs in the report.

Commenting on the flash PMI data, Chris Williamson, Chief
Business Economist at S&P Global Market Intelligence said:

“US businesses are starting 2025 in an upbeat mood on hopes
that the new administration will help drive stronger economic
growth. Rising optimism is most notable in the manufacturing
sector, where expectations of growth over the coming year
have surged higher as factories await support from the new
policies of the Trump administration, though service providers
are also entering 2025 in good spirits.

“Although output growth slowed slightly in January, sustained
confidence suggests that this slowdown might be short-lived.
Especially encouraging is the upturn in hiring that has been
fueled by the improved business outlook, with jobs being
created at a rate not seen for two-and-a-half years.

“However, rising price pressures are a concern, with companies
reporting supplier-driven price hikes as well as wage growth
amid poor staff availability. Higher input cost and selling price
inflation was broad-based across goods and services and, if
sustained, could add to worries that a combination of robust
economic growth, a strong job market, and higher inflation
could encourage a more hawkish policy approach from the
Fed.”

The chart shows a visible uptick in inflation but it’s still far below 2021-2023 levels.