The S&P Global US Composite Purchasing Managers' Index preliminary reading reached a four-month high of 54.8 in November, slightly up from 54.6 in October, signaling ongoing momentum in economic activity, although the services and manufacturing PMI indices went in opposite directions.

The Services PMI Business Activity Index rose to a four-month high of 55.0 from 54.8 in October, above the 54.8 consensus expectation in an Econoday survey.

By contrast, the manufacturing PMI came down to a four-month low of 51.9 from 52.5 the previous month, below the consensus forecast of 52.3. The Manufacturing Output Index edged down to 53.6 from 53.7, still signaling growing activity. The factory sector reported a marked slowing in order book growth alongside an unprecedented buildup of unsold stock.

Overall, the data so far points to an annualized GDP growth of 2.5 percent in the fourth quarter, according to S&P Global Market Intelligence Chief Business Economist Chris Williamson.

The outlook is positive for both services and manufacturing amid reduced concerns over tariffs and political turmoil due to the ending of the government shutdown. The survey also saw a broader improvement in sentiment about the economic outlook, in part driven by increased customer enquiries and hopes of greater policy support, including lower interest rates and more government fiscal stimulus.

On the employment front, however, the report noted a moderating pace of job creation amid rising input costs: while the manufacturing sector hired at the fastest pace for three months, hiring in services was only modest and slower than in October.

Input cost inflation accelerated sharply in November, mainly due to tariffs and higher wage rates. Costs in services increased at the fastest pace since January 2023 while manufacturing input price inflation was the slowest since February although it remained above the average of the past three years.

Manufacturing is seen at 52.3 in the November flash versus 52.5 in the October final and services expected unchanged at 54.8.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector output by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around 10 days ahead of the final report and are typically based upon around 85 percent of the full survey sample. The report tracks changes in variables such as new orders, stock levels, employment and prices across both manufacturing and services. Production is also tracked, defined as"production" for manufacturing and"output" for services. Results are synthesized into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster output is growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The data are produced by S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.