US business sentiment deteriorates despite March lift
Make us a preferred source
Make us a preferred source on Google
More news: Business activity in the US picked up in March, according to S&P Global's Manufacturing PMI survey released on Monday.
The survey’s Composite Output Index, which tracks the manufacturing and services sectors, increased to 53.5 this month from 51.6 in February. A reading above 50 indicates expansion in the private sector. Similarly to UK results released earlier on Monday, the services sector accounted for the US rise.
The US Manufacturing PMI fell from 52.7 in February to 49.8, dropping below the 50.0 no change level to signal the first (albeit marginal) deterioration in business conditions within the goods producing sector since December.
While business activity picked up, US optimism about the coming year fell off for a second month running, bringing confidence to its lowest level since late 2022 (excluding a brief drop ahead of the US Presidential election).
Chris Williamson, chief business economist at S&P Global Market Intelligence said: "Near-term risks also seem tilted to the downside. Growth is concentrated in the service sector as manufacturing fell back into decline after the frontrunning of tariffs had temporarily boosted factory output in the first two months of the year. Similarly, some of the March upturn in services was reportedly due to business picking up after adverse weather conditions had dampened activity across many states in January and February, which could prove a temporary bounce."
Williamson added: "Business confidence in the outlook has also darkened, souring further from the buoyant mood seen at the start of the year to one of the gloomiest readings seen over the past three years, largely caused by growing worries over negative impacts from recent policy initiatives from the new administration. Most widely cited were concerns about the impact of Federal spending cuts and tariffs.”
UK PMI hits six-month high, hinting at economic turnaround
The news: The UK’s private sector grew more than forecast by economists in March, marking the sector’s fastest pace of growth in the past six months.
The numbers: S&P Global’s purchasing managers’ index (PMI) jumped to a six-month high of 52 in March, up from 50.5 in February and well above the 50 threshold separating growth and contraction.
The context: S&P Global said that the solid pace of business activity growth in the service sector helped to offset the sharpest decline in manufacturing production since October 2023.
Private sector employment decreased for its sixth consecutive month and confidence continues to run close to the two-year low reached in January 2025. Manufacturers have now reported a fall in output for five months straight, with March falling at the sharpest pace in 17 months as US President Donald Trump escalates trade war tariffs.
The PMI data comes ahead of the UK Government’s Spring Statement on Wednesday, with ING noting that the Office for Budget Responsibility is poised to lower its near-term growth forecasts and upgrade its inflation projections, and that “those forces more-or-less offset one another when it comes to fiscal headroom.”
What they said: Chris Williamson, chief business economist at S&P Global Market Intelligence said: “An upturn in business activity in March brings some good news for the government ahead of the Chancellor’s Spring Statement, offering a respite from the recent flow of predominantly downbeat economic data. However, just as one swallow does not a summer make, one good PMI doesn’t signal a recovery.”
Williamson added that the improvement was driven by only small pockets of growth, “notably in financial services, with consumer-facing business and manufacturers continuing to struggle against headwinds both at home and abroad.”
