In March, the US private sector’s overall economic activity showed growth, with the S&P Global Composite PMI increasing to 53.5, up from 51.6 in February. However, the Manufacturing PMI fell to 49.8, below the expected 51.9, while the Services PMI improved to 54.3 from 51.
Despite the mixed results, the data suggests an annualised GDP growth rate of 1.9% in March, and 1.5% over the quarter. Following the PMI releases, the US Dollar Index rose by 0.1% to 104.25.
Economic Expansion Trends
The latest economic readings pointed to steady expansion across private-sector industries, even though manufacturing showed some weakness. With the composite PMI improving from February’s figures, overall business conditions appeared to be trending upwards. The stronger services sector offset the manufacturing decline, which suggests that consumer-driven industries remain in good shape.
While the manufacturing PMI dipping below expectations may raise some concerns, it does not entirely change the broader picture. A reading under 50 indicates contraction, but at 49.8, the decline was marginal. It’s not the first time that manufacturing has lagged while services stayed robust, and this sectoral divide has been a recurring theme over the past year.
The GDP growth estimate offers further context. A 1.9% annualised expansion in March indicates that the economy is moving forward, albeit at a measured pace. The quarter’s growth figure of 1.5% suggests that while momentum is not accelerating significantly, it is also not stalling. Markets took note of this, with the US dollar gaining slightly. A rise of 0.1% in the Dollar Index following these figures was not a major move, but it showed that confidence remained intact.
Market Implications And Future Outlook
For derivatives traders, these figures provide clarity on potential near-term shifts. If services continue to outperform while manufacturing remains subdued, pricing in such sectoral differences could become increasingly relevant. The dollar’s response, though moderate, suggests that forex markets are weighing the resilience of the US economy. Additionally, with GDP growth staying positive, any expectations of a sharp downturn seem less justified for the moment.
Looking ahead, traders should consider how these PMI figures align with upcoming data releases. If services maintain their strength, interest rate expectations may remain stable. However, if manufacturing weakens further or services lose momentum, that could change market positioning. With volatility always a possibility, staying attentive to how different sectors perform will be important.
