Business activity in the US gained momentum in March, with orders picking up for the first time in six months, according to a survey released on Friday that also suggests that inflation could continue to ease gradually.
S&P Global said its preliminary US PMI (PMI), which tracks the manufacturing and services sectors, rose to 53.3 this month from 50.1 in February. This was the highest reading since last May.
It was the second consecutive month that the PMI was above 50, indicating growth in the private sector. The measure of new orders received by private companies jumped to 51.2 from 48.5 in February. It was the first time since September that businesses across the board saw growth in new orders.
“So far, March has seen an encouraging recovery in economic growth,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
The increase in orders was concentrated in the services sector, with industrial orders still weak. A recent tightening of financial conditions following the bankruptcy of two regional banks casts a shadow over the prospects for order growth.
There are fears that the resulting tightening of lending standards by banks could make credit less available to households and businesses.
The Fed raised its key interest rate by 25 percentage points this week but has indicated it is on the verge of halting further increases in borrowing costs, in a nod to recent financial market stress.
The preliminary PMI of the services sector rose to 53.8 this month, the highest level since last April, from 50.6 in February. Economists polled by Reuters had forecast a rise to 50.5.
The manufacturing PMI rose to 49.3 from 47.3 in February, contracting for five consecutive months and against a forecast of 47.
Source: Terra
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