March Saw U.S. Economic Growth Accelerate To A 10-Month High

Economic activity in the United States increased in March, led by the services sector, indicating that the economy remained resilient at the end of the first quarter despite rising interest rates and financial upheaval, according to data from the purchasing managers index released on Friday.

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The S&P Global Flash Composite Output Index, which measures manufacturing and service sector activity, increased to 53.3 in March from 50.1 in February, the highest level since May. The indicator indicates that the private-sector economy increased as it surpassed the 50-point no-change barrier.

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The boost in activity was driven by revived demand for service providers, with orders rising for the first time since September.

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"The PMI is broadly consistent with annualized GDP growth nearing 2%, providing a significantly more hopeful picture of economic resilience than the falls recorded in the second half of last year and at the start of 2023," said Chris Williamson, S&P Global Chief Business Economist.

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According to the statistics, activity climbed at service providers while contracting at manufacturers, but at a slower pace than the previous month.

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The flash U.S. services PMI jumped to 53.8 from 50.6, the highest figure in 11 months and above economists surveyed by The Wall Street Journal's consensus prediction of 50.3.

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According to S&P Global, the upturn was underpinned by strengthening demand circumstances, with new orders growing again and new sales increasing.

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"It will be critical to analyze the sustainability of this demand in the face of recent interest rate tightening and the uncertainty induced by banking sector stress, which appears to have had only a minor influence on corporate growth prospects," Mr. Williamson said.

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The manufacturing PMI in the United States increased to 49.3 from 47.3, above economists' predictions of 47.0 and reaching its highest level in five months.

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The report stated that while goods producers reported an increase in production over the month, new orders continued to contract. According to the report, this improvement is likely driven in part by easing supply-chain bottlenecks, which are allowing manufacturers to work through accumulated order backlogs.

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According to the poll, inflationary pressures remained in March. According to S&P Global, selling prices rose, while input costs moderated somewhat but continued to rise due to greater wage increases.

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