This result means moving away from the most significant rise in 32 months and falling to a minimum of nine months, according to S&P Global.
The US Purchasing Managers' Index (PMI) slowed to 52.4 points in January from 55.4 in December, falling from its biggest rise in 32 months to a nine-month low, S&P Global said.
The report notes that the improvement in business activity has moderated to "more modest" levels. However, growth has returned to the manufacturing sector for the first time in six months, accompanied by sustained, albeit slower, growth in the services sector.
Meanwhile, firms' production expectations for the year remained at a level not seen since May 2022 thanks to optimism about the policies of the second Trump administration.
This prompted companies to hire at the fastest pace in two and a half years. It was also the first time in five months that employment rose.
However, inflationary pressures intensified to a four-month high, with both input costs and sales prices rising. This increase in spending affected industry and services alike.
"The surge in optimism is most notable in the manufacturing sector, where 12-month growth expectations have soared as factories await support from the Trump administration's new policies, although service providers are also off to a strong start in 2025," said Chris Williamson, chief economist at S&P Global Market Intelligence.
"The increase in input costs and sales price inflation was broad-based across goods and services and, if sustained, could heighten concerns that the combination of robust economic growth, a solid labor market, and higher inflation could encourage tighter policy by the Federal Reserve," he added.
In disaggregated terms, the PMI for Commercial Activity in the Services Sector is at a nine-month low of 52.8 points, a drop of four points.
The Manufacturing PMI rose to 50.1 from 49.4 in December, its best figure in seven months. The Manufacturing Production PMI, which measures whether industrial companies' activity is higher, equal or lower than the previous month, stood at 50.2 points, up two and five-tenths of a point.
