WASHINGTON – A measure of U.S. business activity increased to an eight-month high in March, fueled by strong demand for both goods and services, but Russia’s war against Ukraine hurt sentiment.
S&P Global said on Thursday its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, rose to a reading of 58.5 this month. That was the highest reading since July 2021 and followed 55.9 in February.
A reading above 50 indicates growth in the private sector. The continued rebound from a slump in January mostly reflected pent-up demand and the easing of COVID-19 restrictions across the country amid a massive decline in coronavirus cases, as well as less severe supply chain disruptions.
The flash composite orders index rose to a nine-month high, with businesses reporting that “a greater availability of inputs allowed them to be more competitive and win new customers.”
With new orders and unfinished work piling up, companies hired workers at the sharpest pace since April 2021.
Inflation continued to push higher, with companies reporting more price hikes for raw materials, fuel and energy. Prices are likely to remain elevated as Russia’s invasion of Ukraine and lockdowns in China amid a COVID-19 outbreak slow the improvement in global supply chains.
Consumer prices notched their biggest annual rise in 40 years in February.
Though businesses were broadly upbeat about the outlook this year, the degree of confidence suffered amid worries about the soaring input costs and the Russia-Ukraine war. According to S&P Global, businesses in the services sector were less upbeat, concerned about the impact of reduced disposable incomes as the cost of living rises.
The survey’s flash manufacturing PMI jumped to a reading of 58.5 this month from 57.3 in February. Economists polled by Reuters had forecast the index for the sector, which accounts for 11.9% of the economy, slipping to 56.3.
Its flash services sector PMI increased to a reading of 58.9 this month from 56.5 in February. Economists had forecast a reading of 56.0 this month for the services sector, which makes up more than two-thirds of U.S. economic activity.
(Reporting by Lucia Mutikani)