US manufacturing activity picked up pace in March, with stronger output and new orders supporting a solid expansion, according to the latest data from S&P Global. However, rising inflation linked to geopolitical tensions and ongoing tariff pressures continues to cloud the outlook.
The headline S&P Global US Manufacturing PMI rose to 52.3 in March, up from 51.6 in February, marking the eighth consecutive month above the 50.0 threshold that signals growth.
Domestic demand drives growth
The latest survey pointed to improved performance across the sector, with both production and new orders increasing at solid rates. The upturn was largely driven by domestic demand, as export sales continued to decline under the weight of tariffs and shipping disruptions.
Some manufacturers also reported a temporary boost from safety stock building, as firms sought to secure inputs and mitigate potential supply issues stemming from the war in the Middle East.
Inflation and supply chains under pressure
Despite stronger growth, cost pressures intensified sharply خلال March. Input prices rose at the fastest pace since August, driven by higher energy costs and ongoing tariffs on key materials such as steel and aluminum.
Supply chains also showed renewed strain, with supplier delivery times deteriorating to the greatest extent since October 2022. Firms linked these delays to transportation disruptions and broader logistical challenges exacerbated by the conflict in the Middle East.
Manufacturers responded by increasing their own selling prices at the quickest rate in seven months, passing on higher costs to customers where possible.
Hiring stalls as caution grows
Employment growth remained subdued, with staffing levels broadly unchanged in March. Some companies reported holding back on recruitment or choosing not to replace departing workers, reflecting increased caution amid rising uncertainty.
At the same time, firms drew down inventories of finished goods to meet demand, partly due to delays in receiving inputs.
Outlook remains resilient but uncertain
Business confidence remained positive overall, supported by planned increases in capital expenditure and research and development. However, optimism softened slightly compared to February, with concerns over energy prices, tariffs, and geopolitical instability weighing on expectations.
Commenting on the data, Chris Williamson said: “Faster growth of output in March points to encouraging resilience for US manufacturing in the face of the outbreak of war in the Middle East.”
He added that while firms currently expect only a modest and short-term impact from the conflict, rising prices and supply delays “have cast a cloud over the outlook,” warning that sustained pressures could begin to weigh more heavily on demand, employment, and production in the months ahead.
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