December PMI Data Signals Cooling US Economic Momentum, Dollar Weakens on Softer Growth Outlook

just_here_for_vibes · 2026-01-09T10:35:08+00:00

The US Dollar Index fell 0.3% due to concerns over economic conditions as December's PMI readings indicated a slowdown in both manufacturing and services. Business confidence has weakened, leading to reduced hiring and cautious corporate sentiment about future growth.

just_here_for_vibes

2026-01-09 10:35:08

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The US Dollar Index retreated 0.3% to 97.96 following the release of December’s PMI readings, signaling market concern over deteriorating economic conditions. The weakness in the greenback reflects broader skepticism about near-term growth prospects, as business sentiment surveys paint a picture of expanding but decelerating activity across America’s private sector.

Manufacturing and Services Show Coordinated Slowdown

December’s S&P Global Manufacturing PMI retreated to 51.8 in comparison to November’s 52.2, mirroring weakness observed in the services economy. The Services PMI fell to 52.9 from 54.1, while the broader Composite PMI declined to 53 from 54.2. Although readings above 50 indicate continued expansion, the downward trajectory across multiple indicators suggests economic momentum is waning.

Economic Growth Decelerating Despite Positive Readings

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, highlighted the concerning trend: the flash PMI data points to annualized GDP expansion of roughly 2.5% during the fourth quarter, yet this masks a two-month deceleration pattern. “The recent economic growth spurt is losing momentum,” Williamson observed, underscoring the shift from earlier resilience to current headwinds.

Business Confidence Deteriorates, Hiring Activity Slows

A notable consequence of this softening economic backdrop is corporate caution. Firms have tightened recruitment efforts in December, reflecting diminished confidence in forward-looking business conditions. The pullback in hiring, coupled with restricted expansion plans, indicates companies are bracing for a more challenging environment ahead. This defensive posture among employers represents a meaningful shift from prior survey periods and carries implications for consumer spending dynamics in coming months.

The convergence of softer PMI data and immediate currency market reaction underscores how closely risk assets track macroeconomic health. As US growth signals weaken, market participants are repricing expectations accordingly.

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