US Manufacturing Activity Showed Modest Growth Amid Rising Cost Pressures

US Manufacturing Activity Showed Modest Growth Amid Rising Cost Pressures

The Institute for Supply Management (ISM) reported that the US manufacturing sector showed a modest improvement in March 2026, with the PMI rising to 52.7 from 52.4 in February. The reading came in slightly above market expectations of 52.5 and appeared to mark the strongest expansion in factory activity since August 2022. The increase was largely driven by a sharper rise in production, which climbed to 55.1 from 53.5 in the previous month. However, underlying components suggested a mixed outlook, as new orders eased to 53.5 from 55.8 and employment continued to contract, slipping to 48.7.

Price pressures were seen intensifying during the period, with the prices index jumping to 78.3 from 70.5, its highest level since June 2022. At the same time, the Supplier Deliveries Index rose to 58.9, indicating slower delivery times for a fourth consecutive month. According to Susan Spence, survey responses reflected growing concerns among manufacturers, with 64% of comments reported as negative. A portion of respondents cited tariffs and geopolitical tensions, including developments related to the Iran conflict, as emerging risks affecting business conditions.

Despite the modest expansion in activity, sentiment appeared cautious. Data suggested that ongoing uncertainty surrounding US economic policy, even after a recent Supreme Court ruling that struck down certain tariffs under the International Emergency Economic Powers Act, continued to weigh on outlooks. Businesses also appeared to remain wary of persistent cost pressures and supply chain disruptions.

Separate estimates from Trading Economics indicated that US business confidence edged up to 52.70 points in March from 52.40 in February. However, projections suggested that confidence could soften to around 51.00 by the end of the quarter. Over the longer term, models pointed to the ISM Manufacturing PMI stabilizing near 52.00 levels by 2027, reflecting expectations of moderate but uneven growth in the sector.