Business Optimism Surges to Nearly Three-Year High on Wave of Confidence and Pro-Business Expectations Under President-Elect Trump

A wave of confidence in the U.S. economy pushes business activity to its strongest level in nearly three years, driven by demand, easing inflation, and expectations of pro-business policies under President-elect Donald Trump.

By yourNEWS Media Newsroom

Business activity in the United States surged in November, reaching its highest point in nearly three years, as both the services and manufacturing sectors showed signs of recovery. The rise is attributed to growing demand, declining inflationary pressures, and renewed optimism about the incoming administration’s pro-business stance, according to the latest S&P Global Flash PMI and University of Michigan Consumer Sentiment surveys.

The S&P Global PMI, which tracks output across the manufacturing and services sectors, rose to 55.3 in November from 54.1 in October, marking the fastest expansion since April 2022. “The business mood has brightened in November, with confidence about the year ahead hitting a two-and-a-half-year high,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

Williamson noted that the prospect of lower interest rates and anticipated pro-business policies under Trump, such as regulatory rollbacks and tariffs aimed at reshoring production, have significantly boosted sentiment.

Manufacturing Sees Improvement Amid Service Sector Strength

While growth was evident across the economy, the services sector led the way, hitting a 32-month high with an index reading of 57. Manufacturing showed signs of stabilization, with its activity gauge increasing from 48.5 in October to 48.8 in November, a four-month high. However, any reading below 50 indicates contraction, underscoring continued challenges in the sector.

Service sector new orders increased at their fastest pace since April 2022, while new factory orders declined for the fifth consecutive month. However, the decline in factory orders slowed significantly, signaling potential stabilization.

“The promise of greater protectionism and tariffs has helped lift confidence in the U.S. goods-producing sector,” Williamson said. “This optimism is already translating into higher factory employment.”

Labor Market and Inflation Developments

In November, the manufacturing sector recorded its first uptick in hiring in four months, reversing recent trends. This followed October’s loss of 46,000 manufacturing jobs, according to the Bureau of Labor Statistics, and a sharp decline in manufacturing hours reported by The Conference Board.

Meanwhile, inflationary pressures continued to ease. The index tracking input costs for businesses fell from 58.2 in October to 56.7 in November, while the prices businesses charged their customers dropped to 50.8, the lowest level since May 2020. These developments could pave the way for further interest rate cuts by the Federal Reserve.

Consumer Sentiment Reflects Economic Optimism

The University of Michigan’s consumer sentiment survey reported a rise in its index to 71.8 in November, marking the fourth consecutive month of improvement. Year-ahead inflation expectations dropped to 2.6%, the lowest reading since December 2020.

As businesses and consumers alike express optimism, the outlook for the U.S. economy appears to be improving. The combination of easing inflation, robust service sector growth, and emerging signs of recovery in manufacturing suggests a promising start to the new administration’s economic agenda.