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US Business Activity Rebounds As Services Growth Outpaces Forecasts, Yet Cost Pressures Intensify

U.S. business output surged in March, powered by a stronger-than-expected rebound in services activity that challenged recession fears. However, mounting cost pressures from tariffs continue to weigh on business confidence.

According to flash business surveys released Monday by S&P Global, the Composite Purchasing Managers Index, which tracks manufacturing and services, climbed to 53.5 in March, up from 51.6 in February. A reading above 50 indicates expansion, and the latest jump marks the strongest pace of private sector growth in 3 months.

The upside surprise came almost entirely from the services side. The S&P Global Services PMI Flash surged to 54.3, decisively beating consensus expectations of 50.8, and up sharply from 51 in the previous month.

Yet, according to Chris Williamson, economist at S&P Global, part of the March upturn in services activity may reflect a temporary bounce following severe weather disruptions earlier in the year.

By contrast, manufacturing showed signs of softening. The S&P Global Manufacturing PMI Flash fell to 49.8, below both February's 52.7 and market expectations of 51.8, dipping back into contractionary territory.

Business Confidence Falls

Despite the overall improvement in output, companies reported growing unease about the months ahead.

Business expectations for the year dropped ...