U.S. manufacturing growth stalled in March amid economic and tariff uncertainty. The S&P Global U.S. Manufacturing PMI remained in expansion territory for a third straight month in March at 50.2 signaling a marginal improvement in operating conditions. The latest reading was higher than the 49.8 forecast.
Here is an excerpt from Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, in the latest press release:
“The strong start to the year for US manufacturers has faltered in March. A combination of improved optimism surrounding the new administration and the need to front-run tariffs had buoyed the goods-producing sector in the first two months of the year, but cracks are now starting to appear. Production fell for the first time in three months in March, and order books are becoming increasingly depleted.
“While business confidence about the outlook remains relatively elevated by standards seen over the past three years, this is based on companies hoping that the near term disruption caused by tariffs and other policies will be superseded as longer-term benefits from the policies of the new administration accrue. However, March has seen more producers question this belief. Business optimism about the year ahead has deteriorated further from January’s near three year high, and has dropped sharply over the past two months, causing firms to stop raising payroll counts for the first time since October.
“A key concern among manufacturers is the degree to which heightened uncertainty resulting from government policy changes, notably in relation to tariffs, causes customers to cancel or delay spending, and the extent to which costs are rising and supply chains deteriorating in this environment. Tariffs were the most cited cause of factory input costs rising in March, and at a rate not seen since mid-2022 during the pandemic-related supply shock. Supply chains are also suffering to a degree not seen since October 2022 as delivery delays become more widespread.
“Data in the coming months will provide important insights into how the inflationary aspects of policies such as tariffs balance out against any benefits to US producers.
Background on the S&P Global US Manufacturing PMI
The S&P Global US Manufacturing PMI™ measures the activity level of purchasing mangers in the manufacturing sector through a questionnaire of ~600 manufacturers. The reported headline number is a weighted average of New Orders (30%), Output (25%), Employment (20%), Suppliers' Delivery Time (15%), and Stocks of Purchases (10%). The S&P Manufacturing PMI is a diffusion index, meaning that a reading above 50 indicates expansion in the sector compared to the previous month and a reading below 50 indicates contraction.
