Factory Momentum Improves, but Tariffs and Middle East Disruptions Keep Costs Elevated
The S&P Global Manufacturing PMI was 52.3 in March, up from the February reading of 51.6. New orders grew at a faster pace in March, but exports continued to decline as tariffs continued to drive up costs and hurt foreign demand. Meanwhile, input and selling prices increased at a faster pace from February, with input costs rising at the highest rate since August. The conflict in the Middle East had a notable impact on the worsening of price pressures in March, primarily from rising energy prices.
Production rose during the month, and combined with an uptick in sales and the use of safety stock accumulated over the past few months, stocks of finished goods fell for the first time in eight months. Employment did not change substantially. Meanwhile, delivery times continued to lengthen, a result of the conflict in the Middle East causing disruptions in transportation and exacerbating stock shortages at vendors.
The potential for a continuation of high sales and planned rises in capital expenditure and R&D spending kept business confidence elevated in March. At the same time, confidence softened slightly as firms noted worries over higher energy prices and tariffs.