U.S. business activity growth at its lowest in almost a year amid war with Iran

The pace of growth in U.S. business activity slowed in March to a near one-year low, while prices for materials and other components rose after the start of the U.S.-Israeli war with Iran, S&P Global's release of preliminary business activity indexes (PMIs) showed. This is the first macroeconomic data to reflect the reaction of businesses to external shocks.

According to S&P Global, business activity growth in the US slowed to an 11-month low in March as businesses reported weaker growth in new orders and a surge in prices following the outbreak of war in the Middle East. The service sector was the hardest hit, as some manufacturers reported higher output and new orders.

In particular, the preliminary composite index of business activity in the U.S. from S&P Global fell from 51.9 points in February to 51.4 in March - thus it reached the lowest level since April last year, the report said. And although the preliminary PMI still exceeded the 50 mark (a level that signals continued growth in output), the March figure indicates a slowdown in growth for the second month in a row, the researchers said.

The decline in this indicator was due to the weakest growth in activity in the services sector in almost a year, Bloomberg writes. Prices for resources in this sector increased to the maximum since Ma last year, while for manufacturers they jumped to a seven-month high.

"Companies are reporting lower demand due to additional uncertainty and the impact [of the conflict in the Middle East] on the cost of living," said S&P Global Market Intelligence chief economist Chris Williamson. "Travel, transportation and tourism challenges are compounded by volatility in financial markets and affordability constraints, particularly concerns about rising interest rates, soaring energy prices and supply chain delays," he added.

In March, headcount fell for the first time in a year, reflecting a reduction in staffing at service providers, Bloomberg also noted. Meanwhile, U.S. manufacturers showed further signs of stabilization. Their growth in orders last month was the strongest since last October, and output accelerated slightly. Manufacturers' expectations for output rose to the highest in a year, Bloomberg wrote.

U.S. stocks on March 24 turned around and turned to decline after rallying the day before. S&P 500 on the background of the ongoing war in the Middle East at the time of publication loses 0.5%, Nasdaq Composite is down 0.9%, Dow Jones loses 0.39%. Brent crude oil is trading at $102.78 per barrel - adding almost 3% from the previous close. April futures for WTI are growing by 3.8% to $91.54.

This article was AI-translated and verified by a human editor