S&P Global’s preliminary composite business activity index for the U.S. fell to 51.4 this month from 51.9 in February. A value above 50 indicates expansion, notes investing.com.
The service sector, the main driver of the overall U.S. economy, has been hit harder than manufacturing by conflict-induced inflationary pressures, S&P Global said.
The PMI for services also fell to 51.1 from the previous 51.7, the lowest reading in eleven months. The PMI for manufacturing, meanwhile, rose to 52.9, hitting a two-month high.
In a statement, Chris Williamson, chief business economist at S&P Global Market Intelligence, said the survey data for March signaled an “unwelcome combination” of slowing growth and rising inflation after the start of the joint U.S.-Israeli offensive against Iran in late February.
“Companies are reporting a hit to demand due to the additional uncertainty and cost-of-living impact caused by the conflict,” Williamson is quoted by investing.com. – Travel, transportation and tourism challenges are being exacerbated by nervousness in financial markets and affordability constraints, including concerns about the impact of higher interest rates, soaring energy prices and supply chain delays, among others.”
Companies are building “safety stocks” and reducing headcount to reduce overhead costs, Williamson added, pointing to concerns that war could lead to more prolonged supply problems and higher prices.
The PMI data “indicate” that overall U.S. gross domestic product, a measure of economic growth, is growing at an annualized rate of just 1.0%, with “a modest 1.3% expansion projected for the first quarter as a whole.”
