According to the latest survey by S&P Global, US business activity in March fell to its lowest level in 11 months, mainly due to uncertainties from the Middle East conflict and rising energy prices. The survey shows that the preliminary value of the US Composite Purchasing Managers Index (PMI) dropped to 51.4, down from February's 51.9, reflecting heightened concerns in the market over accelerating inflation in the coming months.
The Middle East conflict has driven up the prices of energy products and other inputs, leading to the first decline in private sector employment. Particularly in the service sector, the preliminary PMI fell from 51.7 in February to 51.1, indicating that businesses are facing the dual pressures of rising costs and shrinking demand.
Nevertheless, manufacturing activity improved, with the preliminary manufacturing PMI rising from 51.6 in February to 52.4, showing that "the impact of tariffs on orders has somewhat eased." S&P Global stated that the rise in costs mainly stems from the surge in energy prices and supply chain tightness, which has been passed on to consumers, pushing up the output price index to 58.9.
