US March PMI falls revealing signs of cooling, Middle East situation pushes up cost pressures.

The US economy showed signs of cooling in March. The latest data shows that due to tension in the Middle East and rising costs, the pace of expansion in US business activities has slowed down, while input costs have increased significantly. Data released by S&P Global on Tuesday showed that the US composite Purchasing Managers' Index (PMI) fell by 0.5 points to 51.4 in March, reaching a near one-year low. Although the index is still above the 50 mark, indicating continued economic expansion, the momentum of expansion has significantly weakened. Meanwhile, the input price index for businesses rose by more than 3 points, reaching its highest level since May of last year. Looking at individual sectors, the service industry has become the main drag on overall performance. The growth rate of service activities in March dropped to a near one-year low, with input costs reaching a high not seen since May of last year; in the manufacturing sector, raw material costs reached a 7-month high. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated that uncertainty brought about by the Middle East conflict and rising living costs are dampening demand. He pointed out that the impact on industries such as travel, transportation, and tourism is particularly noticeable, while factors such as market volatility, high interest rates, soaring energy prices, and supply chain delays are further weakening the ability of businesses and consumers to withstand these pressures. Cost increases are also beginning to trickle down to the end consumer. Surveys show that selling prices for businesses have seen the largest increase in over three and a half years, indicating a resurgence in inflationary pressures. In terms of employment, the number of employees in businesses saw its first decline in a year in March, primarily reflecting a reduction in hiring by service sector businesses. New orders have grown relatively steadily, but are lower than levels seen for most of last year. However, there are some signs of stabilization in the manufacturing sector. Order growth has reached its strongest since October of last year, output has slightly accelerated, and expectations for future output have risen to levels not seen in over a year. Globally, the spillover effects of the Middle East conflict are gradually becoming apparent. Input cost indicators in the Eurozone have hit a three-year high, economic growth is nearing stagnation; commercial activity in India recorded its weakest growth since October 2022, while cost pressures are near a four-year high; in Japan, raw material costs have reached their highest level since April of last year, and the pace of economic expansion is synchronously slowing down.