04-Apr-2025 08:27

Business activity growth in the US service sector picked up momentum in March, improving noticeably since February on the back of strengthening customer demand.

However, some worries over the impact of federal government policies, especially in relation to tariffs, meant confidence in the outlook fell to its second lowest since the end of 2022.

Jobs growth was also recorded, though only to a modest degree in the context of the survey history amid worries over rising costs. Operating expenses increased in March to the greatest degree in a year-and-a-half, largely attributed by panelists to the impact of tariffs. Competition however limited the ability of firms to pass on higher costs to clients via selling prices.

The S&P Global US Services PMI Business Activity Index improved noticeably in March to 54.4, from 51.0 and the highest reading of 2025 so far. By remaining above the crucial 50.0 no-change mark in March, the index has signaled continuous monthly growth since February 2023.

The S&P Global US Composite PMI Output Index rose to a year-to-date high of 53.5 in March. That was up from 51.6 in February, and indicative of solid growth of the private sector economy.

Overall new work continued to rise, while a net rise in overall employment was recorded in March, but growth was modest amid greater uncertainty in the outlook, reflected by a softening of confidence to its lowest level since last September.

March data meanwhile showed an intensification of price pressures, with costs rising to the greatest degree for nearly two years. In response, output charges increased solidly.

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