US manufacturing sector growth stalled in March. Having grown strongly in February, production declined as order books expanded only modestly despite evidence of a stabilization of exports.
Confidence in the outlook for business activity softened, amid some uncertainty over the impact of federal government policies. Employment numbers were unchanged after four months of job gains.
Softer trends in output and new orders, plus uncertainty in the outlook, weighed on hiring decisions. Cost pressures intensified, largely due to the impact of tariffs, with input price inflation rising to its highest level in over two-and-a-half years.
The seasonally adjusted S&P Global US Manufacturing Purchasing Managers’ Index (PMI) remained above the crucial 50.0 no-change mark for a third successive month in March, but only just. Recording 50.2, down from 52.7, the PMI signaled a marginal improvement in operating conditions that was the weakest of the year so far.
A drop in production for the first time since December weighed heavily on the headline index. Market uncertainty was also frequently reported, linked to concerns over tariff implementation and federal government policies.
Against a backdrop of falling output and slower order book growth, manufacturers signaled a modest cut in purchasing activity.
The steep increase in input prices fed through to a greater rise in manufacturing selling prices during March. Latest data showed that output price inflation picked up for a fourth successive month to a 25-month high.