US S&P flash manufacturing PMI
- Flash estimate 52.5
- Prior month (Feb) was at 52.2
- S&P global manufacturing PMI for February 51.9
Some highlights from the report:
- The S&P Global US Manufacturing PMI was 51.9 in March, slightly down from 52.2 in February, indicating a slight deceleration in sector growth.
- Manufacturing production increased significantly, marking the sharpest growth in nearly two years, driven by improving demand.
- New orders continued to rise for the third consecutive month, though at a slower pace compared to February, with domestic orders outpacing foreign demand.
- Manufacturers are optimistic about future output, spurred by expectations of better economic conditions, marketing efforts, and increased capacity.
- Employment expanded at the most substantial rate since July of the previous year, encouraged by a rise in new orders.
- The ability to reduce backlogs of work was facilitated by improved operating capacity and a slower increase in new orders, continuing a trend of monthly reductions for 18 months.
- Purchasing activity decreased in March as firms preferred using existing stocks to support production, reversing the increase seen in February.
- Inventories of purchased items and finished goods both fell in March, aiming to satisfy current demands efficiently and improve cash flow.
- Input costs rose sharply due to higher oil and raw material prices and increased transportation rates, accelerating the inflation rate.
- Rising labor costs contributed to a surge in selling prices, with output price inflation reaching a peak not seen in almost a year.
- Suppliers' delivery times shortened marginally, continuing a trend that reflects supply chain normalization and adequate vendor stock levels.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said:
- The final reading of the S&P Global Manufacturing PMI signaled a further encouraging improvement in business conditions in March, adding to signs that the US economy looks to have expanded at a solid pace again in the first quarter.
- A key development in recent months has been the broadening-out of the upturn from services to manufacturing, with reviving demand for goods driving the fastest increase in factory production since May 2022.
- Jobs growth has also picked up as firms boost capacity to meet demand. Rising capex spending has likewise buoyed orders for machinery and equipment, in a further sign of firms gaining confidence in the outlook.
- The upturn is, however, being accompanied by some strengthening of pricing power. Average selling prices charged by producers rose at the fastest rate for 11 months in March as factories passed higher costs on to customers, with the rate of inflation running well above the average recorded prior to the pandemic.
- Most notable was an especially steep rise in prices charged for consumer goods, which rose at a pace not seen for 16 months, underscoring the likely bumpy path in bringing inflation down to the Fed's 2% target.
Solid growth. Rising price pressures.
