Post-Trump boom for US economy as output hits 31-month high

Output in the United States economy rose to a 31-month high after the election of Donald Trump and his pledges of tax cuts, tariffs and deregulation.
The world’s largest economy comfortably outperformed its peers in November, with a measure of activity in the private sector reaching the highest level since April 2022.
Equivalent measures fell outright in the UK, France and Germany over the same period, disappointing expectations and pointing to stagnation in the fourth quarter.
The composite purchasing managers’ index (PMI) for the US climbed from 54.1 to 55.3, beating forecasts, driven by a booming services sector. Any figure above 50 indicates growth. The PMI measure slipped to 49.9 for the UK, and 48.1 in the eurozone.
The figures suggest that the US economy is growing at an annualised rate of up to 2.5 per cent in the fourth quarter, after a 2.8 per cent expansion in the previous quarter, the best in the G7 group of nations.
The PMI data is among the first signs of a mini-boom triggered by Trump’s election on November 5, with the returning president promising hundreds of billions of dollars in tax cuts for corporations and swingeing tariffs to protect American industry from foreign competition.
Confidence among American firms rose to the highest since May 2022 in anticipation of Trump’s policies and hopes of lower interest rates next year. The US Federal Reserve is poised to loosen borrowing costs for the third time this year in December.
“The prospect of lower interest rates and a more pro-business approach from the incoming administration has fuelled greater optimism, in turn helping drive output and order book inflows higher in November,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said.
The dollar strengthened after the figures, rising by 0.6 per cent against a basket of currencies to the highest level since July 2022.
On Wall Street, indices continued to rally on Friday with the Dow Jones industrial average closing on its 44th record high of the year so far after a rise on the day of 1 per cent to 44,296.51, for a weekly gain of 2 per cent.
The broadly-based S&P 500 rose 0.4 per cent to 5,969.34, its sixth highest close since the beginning of the year and a rise of 1.7 per cent on the week. The technology-heavy Nasdaq was up 0.2 per cent on the day at 19,003.65, for a weekly rise of 1.7 per cent.
As equity markets rose so too did investors’ appetite for cryptocurrencies. Bitcoin, the most widely traded, continued to hit new records touching an intraday high of $99,797.99 before paring gains for a daily rise of 1 per cent to $99,290.67 in New York.
US economic growth was driven “solely” by the country’s services sector, the survey said, where output rose to a 33-month high, pushing the index to 57. Companies also enjoyed falling inflation and higher demand for their goods and services.
“Respondents also often cited a more business-friendly incoming administration as beneficial to the outlook, notably in terms of looser regulation and protection measures, the latter helping boost sentiment, particularly in manufacturing,” the survey found.
Robust US economic growth has been one of the few bright spots in the rich world, as large economies such as France, Germany and the UK have stagnated in the second half of the year.
“While reduced political uncertainty seems to have lifted business sentiment in the US, the PMIs suggest that the outlook for activity elsewhere remains bleak,” Ariane Curtis, senior global economist at Capital Economics, a consultancy, said.