Core Viewpoint - The US service sector is experiencing its weakest growth since April, with the S&P Global US Services PMI Business Activity Index dropping to 52.5 in December from 54.1 in November, indicating a slowdown in expansion [1]. Group 1: Growth and Demand - The easing of growth suggests that the post-pandemic resilience of the US economy may be diminishing, with business activity rising for the 35th consecutive month but at a noticeably slower pace [2]. - New business inflows have slowed to their weakest rate in approximately 20 months, attributed to tighter client budgets and increased caution among customers [3]. - The service sector saw the smallest rise in new business in 20 months, alongside the first decline in manufacturing orders in a year, indicating a broad-based weakening in demand growth [4]. Group 2: Employment and Cost Pressures - Employment growth in the service sector stalled in December, marking the first time since February that firms cutting jobs outnumbered those adding them, linked to cost concerns and budget constraints [6]. - Despite the hiring stall, backlogs of work increased modestly for the tenth consecutive month, while operating costs rose at the fastest pace since last May [7]. Group 3: Inflation and Pricing - Input price inflation reached a seven-month high, driven by tariffs, higher supplier charges, and rising labor-related expenses, leading companies to increase selling prices at a quicker rate [8]. Group 4: Business Confidence - Business confidence for the upcoming year remains positive but has softened further in December, staying below its long-term average due to uncertainty over government policy, tariffs, and affordability [9]. - Future output expectations entering 2026 are significantly lower than at the start of 2025, raising concerns that the slowdown in December and job market issues could extend into the new year [10].