US Business Activity Holds Steady in March, Inflation Picks Up
Steady Business Activity with Rising Prices
In March, U.S. business activity remained stable, but prices saw a general increase, hinting at potential sustained inflation following a pickup earlier in the year.
Composite PMI Output Index
S&P Global’s flash U.S. Composite PMI Output Index, monitoring manufacturing and services sectors, dipped slightly to 52.2 this month from 52.5 in February, indicating expansion in the private sector with a reading above 50.
Solid Economic Performance
While services sector activity cooled further, manufacturing reached a 21-month high. The overall survey suggests that the economy ended the first quarter on a strong note, although growth likely slowed compared to the previous quarter.
Global Outperformance
Despite multiple interest rate hikes by the Federal Reserve to combat inflation, the United States continues to outperform its global counterparts.
Price and Inflation Trends
The survey indicated a decrease in new orders received by businesses but a rise in prices paid for inputs. Output prices also saw an increase, particularly in services, signaling potential inflationary pressures.
Future Inflation Expectations
With inflation likely to rise in the coming months, the increase in both input and output prices could further contribute to the trend. Consumer prices have already shown strong growth in the early months of 2024.
Manufacturing and Services Sector Insights
Manufacturing expanded further, reaching its highest level since June 2022, with growth in new orders, employment, and improved supply chains. The services sector, on the other hand, saw a slight dip in March, with rising prices and inputs but unchanged employment levels.
