By Jeffry Bartash
Companies are banking on lower interest rates, reduced tariffs friction and increased government spending
Customers wait in line earlier this autumn at an Apple Store in New York to see new iPhone models. The U.S. economy appears to be growing at a decent pace as the Thanksgiving holiday draws near.
The U.S. economy grew in November at the fastest pace in four months, new surveys showed, and businesses turned more optimistic about the future following the end of the federal government shutdown.
S&P Global said its flash index of service companies, which employ most Americans, rose slightly to a four-month high of 55 in November. Any number above 50 signals expansion, and readings over 55 are exceptional.
A survey of manufacturers, however, dipped to a four-month low of 51.9 from 52.2 in the prior month. Growth was still positive, however.
Companies were buoyed by the end of the longest government shutdown in history and a hope that Washington would be more supportive of business in 2026.
Executives are banking on lower interest rates, less regulation and more government spending next year. They also are less worried about tariffs after the Trump White House eased some duties and struck more trade deals.
“A marked uplift in business confidence about prospects in the year ahead adds to the good news,” said Chris Williamson, chief business economist of S&P Global.
The S&P surveys are the first indicators each month that show how the economy is faring.
The S&P’s findings have been especially important lately due to the 43-day federal shutdown that led to a freeze on critical government-issued economic reports. Most of the postponed economic reports still have not been released.
Key details: The service side of the economy powered growth in November, S&P said. New orders hit their highest level since the start of the year.
Manufacturers, on the other hand, reported a slowdown in new orders. The amount of unsold goods they have on hand also rose to the highest level in the 18-year history of the survey, another sign of tepid demand. Exports have been particularly weak.
Even though worries about tariffs eased, businesses still say higher U.S. duties are adding to costs and making it harder to sell goods to customers.
Companies have responded by trying to keep a lid on costs and by cutting back on the number of people they hire.
“The rate of job creation moderated slightly “to one of the lowest [levels] seen over the past year,” S&P said.
Big picture: The economy has expanded faster than expected this year even amid the worst trade wars in decades, but companies say higher tariffs are still a drag on the economy with job creation in particular being stunted.
Businesses are cautiously optimistic about next year, but whether they remain so will depend on if Donald Trump’s administration supports more pro-growth policies and pushes its new tariffs to the backburner.
Looking ahead: “Hopes for further interest-rate cuts and the ending of the government shutdown have boosted optimism alongside a broader undercurrent of improved economic optimism and reduced concerns over the political environment,” Williamson said.
Market reaction: The Dow Jones Industrial Average DJIA and the S&P 500 SPX rose slightly in early Friday trading. Stocks have fallen sharply over the past week.
MarketWatch Live: S&P 500 and Nasdaq head for worst week since April even as stocks attempt Friday rebound
-Jeffry Bartash
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11-21-25 1054ET
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