S&P U.S. Manufacturing PMI Increases in March
The S&P Global Flash U.S. Manufacturing PMI increased from 51.6 to 52.4 in March, a two-month high. This continued the trend of eight consecutive months of growth. Factory production and new order growth both improved in March, with new orders experiencing their strongest growth since October. Meanwhile, export orders stabilized after eight months of decline due to some softening of tariff impacts.
Inventories grew in March as companies mentioned purchasing safety stock to ensure supply availability amid delivery concerns. At the same time, supplier delivery times lengthened to the greatest extent since October 2022, with respondents linking the increase to the conflict in Iran. Manufacturers’ input cost inflation rose at the fastest pace in 10 months, largely due to the energy price spike. Meanwhile, selling price inflation moved up, resulting in the largest increase in average selling prices since August 2022. Overall, price increases accelerated for manufacturers and the service industry.
Overall business activity declined to an 11-month low, edging down from 51.9 in February to 51.4 in March. Although manufacturing growth accelerated, the growth rate in the services sector continued to moderate, falling to an 11-month low. Overall, growth of new orders cooled, driven by a decline in export sales. Employment fell for the first time in over a year amid declining private sector confidence.
Furthermore, optimism about future business conditions declined in March. The optimism reflected manufacturers’ war-related concerns being countered in part by reduced worry over the impact of tariffs. In addition, the outlook for service providers hit its weakest level since October over concerns of higher energy prices and the prospect of higher interest rates.