U.S. Business Activity Growth Slows to Six-Month Low in December

In December 2025, U.S. business activity grew at its slowest pace in six months, signaling a potential slowdown in economic momentum as the year draws to a close. The preliminary purchasing managers index (PMI) released by S&P Global for December showed that composite business activity fell to 53.0, down from November’s reading of 54.2. While the PMI still indicates expansion, the dip reflects a deceleration in the pace of growth and raises concerns about the future direction of the U.S. economy.

Both the services and manufacturing sectors experienced softer growth during December. In particular, new orders—an important gauge of future activity—declined for the first time in a year. This drop in demand was seen as a significant signal that businesses are encountering headwinds, with companies potentially adjusting their expectations for the year ahead. Analysts have pointed to several key factors behind this slowdown, including persistent labor shortages, continued supply-chain challenges, and high input costs. These issues have not only made it more difficult for businesses to meet demand but have also contributed to the rising costs of goods and services.

Economists are now forecasting that the U.S. economy could face further deceleration in early 2026. This slowdown comes on the heels of a volatile year characterized by shifting economic policies, market uncertainty, and inflationary pressures that have weighed on both consumers and businesses. Despite the ongoing expansion indicated by the PMI, these challenges are starting to take a toll on the broader economy. Analysts believe that companies, particularly in manufacturing and service industries, may find it harder to maintain growth rates in the face of these persistent issues.

While the PMI remains above the critical 50 threshold that separates expansion from contraction, the drop in activity suggests that businesses are becoming more cautious about the future. This slowdown could be a sign of a broader economic cooling trend, with growth potentially tapering off in the months ahead. Despite the moderation in growth, some sectors of the economy are still holding up relatively well, but the uncertainty surrounding supply chains, labor markets, and input costs suggests that businesses may struggle to maintain their previous momentum.

Looking ahead to 2026, it is unclear how long this deceleration in business activity will last or whether it will deepen further. What is certain, however, is that the U.S. economy faces a challenging road ahead, with multiple factors contributing to a more uncertain and unpredictable business environment. As the year comes to a close, many economists are watching closely to see if the trends observed in December are a precursor to broader economic challenges in the new year.