- Feb final services was 51.0
- Manufacturing 49.8 vs 51.7 expected
- Prior manufacturing was 52.7
- Composite PMI 53.5 vs 51.6 prior
The services PMI peaked near 57 after the election but it’s has trended lower since the tariff talk ramped up. This month, we got a nice rebound on the services side but manufacturing fell below the 50 level. Overall, the services side is a much more important component of the US economy so I take this as good news. That said, S&P says this number isn’t exactly pointing to gangbusters growth.
Chris Williamson,
Chief Business Economist at S&P Global Market
Intelligence”
“A welcome upturn in service sector activity in March has
helped propel stronger economic growth at the end of
the first quarter. However, the survey data are indicative
of the economy growing at an annualized 1.9% rate in
March and just 1.5% over the quarter as a whole, pointing
to a slowing of GDP growth compared to the end of 2024.
“Near-term risks also seem tilted to the downside.
Growth is concentrated in the service sector as
manufacturing fell back into decline after the front-
running of tariffs had temporarily boosted factory output
in the first two months of the year. Similarly, some of the
March upturn in services was reportedly due to business
picking up after adverse weather conditions had
dampened activity across many states in January and
February, which could prove a temporary bounce.
“Business confidence in the outlook has also darkened,
souring further from the buoyant mood seen at the start
of the year to one of the gloomiest readings seen over
the past three years, largely caused by growing worries
over negative impacts from recent policy initiatives from
the new administration. Most widely cited were concerns
about the impact of Federal spending cuts and tariffs.
“A key concern over tariffs is the impact on inflation, with
the March survey indicating a further sharp rise in costs
as suppliers pass tariff-related price hikes on to US
companies. Firms’ costs are now rising at the steepest
rate for nearly two years, with factories increasingly
passing these higher costs onto customers. Thankfully,
from the Federal Reserve’s perspective, services
inflation remains relatively subdued, but this reflects the
need to keep prices low amid weak demand, which will
harm profits.”
More to come
