The US private sector saw a renewed expansion in business activity in March as manufacturers and service providers in the country reported upturns in output, with service sector firms driving the increase.
The S&P Global Flash US PMI Composite Output Index registered 53.3 in March— up from February’s 50.1-point rating. The figure marks the PMi’s highest rating in almost a year and signalled a solid expansion in private sector activity.
Goods producers recorded the first increase in production since October 2022, which partially stemmed from the greatest improvement in delivery times on record.
“March has so far witnessed an encouraging resurgence of economic growth, with the business surveys indicating an acceleration of output to the fastest since May of last year,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
The S&P Global Flash US Manufacturing PMI currently stands at 49.3, up from February’s 47.3, which signals a slight deterioration in operating conditions across the manufacturing sector in March.
S&P said the rate of decline in the sector was the slowest in the current five-month sequence of deterioration amid a renewed rise in production and a softer fall in new orders.
The goods-producing sector’s output also increased for the first time since October 2022 and currently stands at its steepest rate in 10 months. Businesses attributed the greater production rate to a moderated contraction in new sales.
Furthermore, the decline in new orders was the slowest in the current six-month sequence of decrease amid signs of improvements in demand conditions.
However, export orders fell at a sharper pace.
Inflationary pressures in the manufacturing sector moderated in March as firms reported slower activities in input and output amid less marked supplier price hikes and moderations in some raw materials costs.
Businesses are looking forward to greater investment, increased marketing spending, and boosts to client demand.
However, the S&P survey discovered a degree of confidence below the series trend amid inflationary concerns and uncertainty about the outlook for demand.
“Although manufacturing eked out a small production gain, this was mainly a reflection of improved supply chains allowing firms to fulfil backlogs of orders that had accumulated during the post-pandemic demand surge. Tellingly, new orders have now fallen for six straight months in manufacturing. Unless demand improves, there seems little scope for production growth to be sustained at current levels,” Williamson said.
