The numbers: The U.S. economy got off to a good start as growth sped up in January a pair of S&P business surveys showed on Wednesday, indicating that a recession still appears far off.
The S&P flash U.S. services PMI climbed to a seven-month high of 52.9 in January from 51.4 in the prior month.
The flash U.S. manufacturing PMI, meanwhile, jumped to a 15-month high of 50.3 this month from 48.2 in December. It’s the first time the index has been positive in more than a year. Numbers above 50 signal growth in the economy.
The surveys are the first indicators to give a sense of how the U.S. economy is doing in the new year.
The verdict: Growth is steady as she goes.
Big picture: The U.S. economy softened toward the end of 2023, but it still appeared to grow at a reasonably healthy pace.
Gross domestic product, the official scorecard for the economy, is estimated to have expanded at a 2% pace in the fourth quarter. The report comes out Thursday.
The likely end of increases in interest rates by the Federal Reserve and rising odds of interest rate cuts soon could also give the economy more support in the months ahead.
The Fed might even be on the cusp of achieving a fabled “soft landing” — bringing down inflation through higher interest rates without a recession or big increase in unemployment.
Key details: New orders, a sign of future sales, rose for both goods and services in January. Business confidence also hit a 20-month high.
Employment also increased, though not as much as in December.
The prices that businesses pay for supplies rose more slowly, as did the prices they charge customers, the surveys found.
The one negative: Production fell at manufacturers focused on reducing excess inventories.
Looking ahead: “For now the survey[s] send a clear and welcome message of resilient economic growth and sharply waning inflation,” said S&P business economist Chris Williamson.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
rose in Wednesday trades.
The stock market has rallied to new all-time highs in the expectation of in interest rate cuts and a prolonged economic expansion.
