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US service sector momentum softened at the end of 2025, with Services PMI finalized at 52.5 in December, down from 54.1 in November and the lowest level in eight months. Composite PMI also eased to 52.7 from 54.2, pointing to slower but still expansionary growth as the year closed.
According to S&P Global Market Intelligence Chief Business Economist Chris Williamson, the resilience of the US economy is showing “signs of cracking.” New business growth at services firms was the weakest in nearly 20 months, while manufacturing orders fell for the first time in a year, signalling “broad-based weakening of demand growth”.
The surveys also flagged emerging labor market stress, with companies cutting headcounts outnumbering those hiring for the first time since February. Future output expectations have dropped sharply compared with early 2025, raising concern that December’s slowdown and job market malaise “could spill over into the new year”.
At the same time, firms reported rising tariff-related cost pressures, heightening the risk of “slower economic growth and stubbornly high inflation” at the start of the new year.
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