US business activity picked up this month, but folks are still feeling gloomy

What’s going on here?

The latest US Purchasing Managers’ Index (PMI) for March sent some mixed signals – with manufacturing struggling, and the services sector staging a mild comeback.

What does this mean?

Manufacturing is in contraction mode, with the PMI slipping to 49.8 – a tad below the critical 50 mark that separates a growing sector from a shrinking one. The issue is slower output, largely because of trade barriers (tariffs) that are driving up costs. That’s showing up in the data, too – input prices jumped 4.1 points to 66.1, highlighting the pressure manufacturers are under.

Meanwhile, the services sector is holding up better. Business activity in that sector climbed over three points to 54.3, helped by stronger demand and hiring. But even with those gains, things are a long way from the post-election highs.

Finally, despite lingering concerns about tariffs and government spending cuts, the composite PMI actually ticked higher. That said, companies surveyed for the report made one thing clear: they’re hesitant to ramp up hiring in this uncertain climate.

Why should you care?

For markets: Tough times for factories.

Manufacturers are feeling the squeeze as tariffs threaten to push costs even higher. On the bright side, the services sector’s resilience could signal some investment opportunities.

Big picture: A global shift is underway.

Trade barriers and economic uncertainty aren’t just a US problem – they’re rippling across global markets. And as these trends play out, they could reshape the economic landscape for years to come.

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