US economic output hit its highest level in nearly three years to close out 2024, according to the latest data from S&P Global.

S&P Global's flash US composite PMI , which captures activity in both the services and manufacturing sectors, came in at 56.6 in December, up from 54.9 in August. Economists had expected the index to tick up to 55.1.

Increased activity in the services sector drove the gains, with the services PMI business activity index hitting a reading of 58.5, its highest level in 38 months. Meanwhile, the manufacturing PMI declined to 48.3 in December, down from 47.9 and marking a three-month low for the index.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the US economy grew at its fastest pace in nearly three years this month, "consistent with GDP rising at an annualized rate of just over 3% in December."

“Business is booming in the US services economy, where output is growing at the sharpest rate since the reopening of the economy from COVID lockdowns in 2021," Williamson said in the release.

Williamson's bullish outlook on GDP growth for the fourth quarter falls in line with other projections. The Atlanta Fed's GDP Now tool , which incorporates real-time data throughout the quarter to project economic growth, currently projects the US economy grew at a 3.3% annualized pace in the final quarter of 2024. Meanwhile, economists at Goldman Sachs project GDP is pacing at 2.4% for the quarter.

Still, Williamson noted the growth in the US economy remains heavily skewed to activity in the services sector.

“It’s a different picture in manufacturing, however, where output is falling sharply and at an increased rate, in part due to weak export demand," Williamson said.

Since Donald Trump's election win, sentiment has shot higher, with confidence in the business outlook over the next 12 months hitting its highest level in two and a half years. But even that hasn't come without caveats.

"Some of the high spirits seen after the election in the manufacturing sector have been checked over concerns surrounding tariffs and the potential impact on inflation resulting from the higher cost of imported materials," Williamson said. "December saw raw material prices spike sharply higher amid supplier-led price rises and higher shipping costs, in a reflection of busier supply chains in advance of threatened protectionism in the new year.”

At large, continued growth in the US economy has been a key call among Wall Street strategists who see the stock market rally continuing in 2025. Wednesday will bring a fresh look at how the Federal Reserve is feeling about the state of the economy and what it means for the future path of interest rates. Investors expect that the Fed's latest Summary of Economic Projections (SEP) will provide a window into the central bank's thinking. That includes its " dot plot ," which maps out policymakers' expectations for where interest rates could be headed in the future, as well as a look at where the Fed believes inflation, GDP, and unemployment will be at the end of 2025.