By Joshua Kirby

U.S. business activity grew more quickly in January thanks to a strong services sector and recovery in manufacturing, a purchasing managers' survey showed Wednesday.

The S&P Global Flash U.S. Composite PMI--which gauges activity in the manufacturing and services sectors--rose to 52.3 from 50.9 in the last month of last year.

The reading suggests that U.S. economic activity is accelerating as 2024 gets going. The index for services showed the sector growing at a faster rate, rising to 52.9 from 51.4 in December. The manufacturing index meanwhile turned positive, hitting 50.3 compared with 47.9 previously. Both exceeded economists' forecasts set out in a poll compiled by The Wall Street Journal.

Manufacturers nevertheless reported a moderate drop in activity and some disruption to supply from shipping and bad weather.

"An encouraging start to the year is indicated for the U.S. economy," said Chris Williamson, chief business economist at S&P Global Market Intelligence. Optimism about the year ahead is growing, with companies more confident than they have been since May 2022, he said.

Lower inflation is helping boost sentiment, Williamson said, with business seeing a clear path to lower interest rates this year. "The survey sends a clear and welcome message of resilient economic growth and sharply waning inflation," he said.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

January 24, 2024 10:20 ET (15:20 GMT)