U.S. Business Activity Holds Steady Amid Tariff Concerns

In January, U.S. business activity remained stable, with improved new orders counterbalanced by a sluggish labor market and tariff-induced cost concerns. S&P Global's Composite PMI showed slight expansion, but labor and pricing pressures persist. The economy grew robustly, powered by consumer and business spending on technology.

Despite steady business activity in January, the U.S. economy faces challenges from a sluggish labor market and ongoing tariff-related cost concerns, according to a survey released Friday. The S&P Global Composite PMI Output Index dipped slightly, indicating moderate private sector expansion.

The economy grew at a 4.4% annualized rate in the third quarter, driven by strong consumer and business spending, notably on intellectual property related to artificial intelligence. Yet, export levels declined, business confidence waned, and tariff-driven costs remained a key concern.

Labor market stagnation persists with minimal employment growth and difficulties in hiring, potentially linked to an immigration crackdown. Despite tariff pressures, inflation is expected to stay elevated, although the Federal Reserve is likely to maintain stable interest rates while monitoring conditions.