US PMI data for March point to a deteriorating growth-inflation balance, with activity slowing while price pressures rise. PMI Manufacturing improved from 51.6 to 52.4, but PMI Services fell from 51.7 to 51.1, an 11-month low. This pulled PMI Composite down from 51.9 to 51.4, also marking its weakest level in nearly a year.
The data suggest that the Middle East conflict is beginning to weigh on demand while lifting costs. According to S&P Global’s Chris Williamson, companies are reporting weaker demand due to heightened uncertainty and the rising cost of living, even as they build “safety stocks” to guard against potential supply disruptions. At the same time, firms are trimming headcounts to manage rising expenses.
Inflation pressures are also intensifying. Price gauges from the survey indicate consumer inflation could accelerate back toward 4%, while growth is expected to slow to around a 1.0% annualized pace.
