US Business Activity Expands in March, Outlook Worsens

U.S. business activity showed signs of recovery in March, with the S&P Global Composite PMI Output Index rising to 53.5, indicating expansion in the private sector. The services sector was the main contributor to this growth, benefiting from improved weather, while manufacturing slipped back into contraction due to rising input costs and concerns over new tariffs. Despite the positive PMI figure, overall business sentiment weakened significantly, with fears surrounding government spending cuts and the potential impact of tariffs on inflation. Analysts noted that while the uptick in activity suggests momentum, other economic indicators point to a fragile foundation, as consumer sentiment declines. The Federal Reserve has also revised its GDP growth projection for 2025 down to 1.7%, reflecting broader economic uncertainties. Consequently, while businesses are experiencing increased activity, they remain cautious about future growth prospects.