Employment edged higher for the first time in five months in response to rising inflows of new orders.

However, growth was again dependent on the services economy, where a stronger rate of expansion—fueled in particular by surging financial services activity—contrasted with a renewed downturn of manufacturing output, the survey produced by S&P Global in association with the Institute of Supply Management and the International Federation of Purchasing and Supply Management, revealed.

Growth disparities widened by region, with the United States outperforming other major developed economies, all of which reported either falling or near-stalled output, and India far outpacing other major emerging markets.

Global business confidence, meanwhile, slipped lower, ending 2024 at one of the lowest levels seen over the past year, amid rising concerns over economic growth prospects in the year ahead, which were often linked to geopolitical and protectionism worries.

Although sentiment lifted higher in the United States, confidence fell across emerging markets and remained subdued in Canada, the eurozone and the United Kingdom.

S&P Global Market Intelligence's PMI surveys indicated that global business activity expanded for a fourteenth successive month in December 2024. The rate of expansion ticked higher for a third month running to register the strongest growth since last August.

The headline J.P. Morgan global composite PMI output index, covering manufacturing and services in over 40 economies, rose from 52.4 in November to 52.6 in December.

At its current level, historical comparisons indicate that the PMI is broadly consistent with the global economy growing at an annualised rate of 2.8 per cent. That compares with an average GDP growth rate of 3.1 per cent in the decade prior to the pandemic.

The current growth rate signalled by the PMI is, therefore, one that is modestly below-trend but accelerating, S&P Global Market Intelligence said in a release.

The gap in performance between the global services and manufacturing sectors widened in December to the greatest for one-and-a-half years. While services growth revived to a four-month high, registering one of the strongest rates seen over the past one and half years, manufacturing output contracted slightly for the second time in four months.

While basic industry sectors saw the steepest downturns, machinery and equipment makers notably also reported the sharpest drop in output for 32 months.

Among the major developed economies, the United States saw the strongest expansion for an eighth successive month, the rate of growth rising to the fastest since April 2022 as surging services growth (a 33-month high) offset a steepening manufacturing decline.

The improved US performance contrasted with malaise reported elsewhere in the major developed markets. Only marginal output gains were reported in Japan, the United Kingdom and Australia during December, while eurozone output fell for the third time in four months and output fell in Canada for the first time in three months.

However, in both the eurozone and Canada the falls in output were only modest.

While the eurozone, UK, Japan and Australia all reported higher services output, all four reported lower manufacturing output in the closing month of 2024, with especially steep factory output falls seen in the eurozone, UK and Australia. Canada bucked the trend, with higher factory output reported, but it was the only major developed economy to report lower services activity.

India once again led growth among the BRICS 'emerging' economies by a wide margin, as has been the case since July 2022, with growth picking up slightly in December amid sustained strong performances across both manufacturing and services.

Growth meanwhile slowed in the other BRICS emerging economies. China reported only modest growth and the weakest expansion of output for three months. Brazil also reported a considerable loss of momentum, with growth down to a 12-month low amid weakened expansions across both manufacturing and services.

Only modest growth was likewise reported in Russia, the expansion cooling from November's eight-month high, thanks to a near-stalled manufacturing economy and slower growth of service sector activity.

Improved inflows of new orders, which rose globally at the fastest rate for seven months, helped global private sector employment edge higher in December for the first time in five months. A marginal rise in service sector staffing offset a slight fall in factory payrolls.

In the major developed markets, US firms reported an upturn in the pace of job creation to the highest since last July, thanks to the strongest rise in new orders for 32 months, driven by renewed hiring in services.

In contrast, UK employment fell at the sharpest rate since January 2021 due in part to the sharpest fall in new order for 14 months, but also in reaction to recent tax changes.

Falling orders also prompted a further loss of in eurozone jobs, where the rate of decline hit the joint-steepest since December 2020. Rates of job creation also cooled in Japan and Canada.

In the major emerging markets, robust job gains in India were accompanied by further net job creation in Russia and Brazil, but jobs were cut for a fifth straight month in China.

Looking to 2025, worldwide business expectations for output in the year ahead remained well above the near-two-year low seen in September, which had seen sentiment slump on uncertainty over the US election outcome.

Sentiment nonetheless remained below the long-run average, having dipped slightly again in December, due principally to ongoing geopolitical concerns and intensifying economic growth worries.

Although service sector companies became slightly more optimistic in December, often reflecting hopes of lower interest rates and the waning cost of living squeeze, future sentiment slumped to the second-lowest in 14 months in manufacturing, as factories around the world grew more concerned over the impact of the potential rise in trade protectionism.

Among the major developed economies, the lowest confidence relative to long-run averages was recorded in the United Kingdom, where expectations hit a two-year low amid growing reports of concerns over the impact of recent government policy changes, followed by the eurozone and Canada, both of which saw ongoing concerns over proposed US tariffs.

US business confidence, in contrast, rose further above its long-run average as companies warmed to the prospect of a more business-friendly administration in 2025. Future expectations in the US rose to the joint-highest since May 2022.

Japan saw the highest business optimism of the big, developed economies relative to its long-run average, though the degree of positivity faded to one of the lowest seen over the past two years, in part on trade worries.

Fibre2Fashion News Desk (DS)