Flash PMI Data: Manufacturing Struggles
The latest S&P Global Flash US PMI Composite Output Index for March signaled a mixed economic outlook, rising to 53.5 from February’s 51.6. Stronger performance in services gave optimism, as the Flash US Services PMI Business Activity Index surged notably to 54.3, up from the prior month’s 51.0. However, manufacturing painted a different, troubling picture: the Flash US Manufacturing Output Index dropped to a three-month low at 48.8, while the overall Manufacturing PMI slid below the critical 50.0 threshold to 49.8, down significantly from 52.7 in February, signaling a contraction in factory activity.
Survey respondents cited fresh orders in manufacturing nearly stalling, undercut by declining employment and sustained headwinds from tariffs and elevated input costs. Manufacturing employment fell for the first time since October, indicating that pressures on producers are beginning to weigh heavily. In contrast, the service sector benefited from improving weather conditions and modestly stronger demand, yet employment growth remained lackluster, signaling that firms remain cautious.
The data, collected between March 12 and March 21, also illustrated weakening confidence among businesses for the year ahead. Expectations fell to their second-lowest level since October 2022, with uncertainty around federal policies, tariffs, and proposed spending cuts cited as prominent concerns. Chris Williamson, Chief Business Economist at S&P Global, highlighted this trend in an official report, noting, “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.”
This mixed PMI snapshot arrives shortly after the Federal Reserve maintained interest rates unchanged, publicly attributing part of the persistent inflationary pressures to recent trade policies instituted by President Trump. Market watchers and investors alike will turn their attention to the pivotal forthcoming Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, scheduled for release March 28, as they attempt to ascertain the central bank’s next moves amid an uncertain economic landscape.
Ultimately, the latest PMI data underscores the precarious footing of the U.S. economy. As manufacturing falters and service-sector resilience faces sustained cost pressures, businesses and investors alike continue to brace against policy uncertainty, tariff impacts, and stubborn inflationary headwinds.
