U.S. Business Activity Slows to 11-Month Low Amid Iran War Pressure — S&P Global

Investing.com - U.S. business activity growth slowed to an 11-month low in March, with companies facing increased uncertainty related to the nearly month-long Iran conflict and rising living costs.

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The S&P Global U.S. Composite Purchasing Managers’ Index (PMI) fell to 51.4 this month, down from 51.9 in February. A reading above 50 indicates expansion.

S&P Global said that the service sector, which is the main driver of the U.S. economy, has been hit harder by inflation pressures caused by the conflict than manufacturing.

The services PMI also declined from 51.7 to 51.1, the lowest in 11 months. Meanwhile, the manufacturing PMI rose to 52.9, the highest in two months.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said in a statement that the March survey shows an “unsettling combination” of slowing growth and rising inflation following the U.S.-Israel joint attack on Iran in late February.

Williamson said, “Businesses report that the additional uncertainty and cost-of-living impacts from the conflict have dampened demand.” “Issues related to travel, transportation, and tourism have worsened due to financial market volatility and affordability concerns, especially worries about higher interest rates, soaring energy prices, and supply chain delays.”

He added that companies are building “safety stocks” and cutting staff to reduce management costs, raising concerns that the war could lead to longer-term supply issues and higher prices.

The PMI data “indicates” that the overall U.S. gross domestic product — a measure of economic growth — has an annualized growth rate of only 1.0%, with first-quarter growth expected to be a modest 1.3%.

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