US Flash Purchasing Managers Index (PMI) signals further slowdown
US business activity weakened in March, slowing down to its lowest pace in nearly a year as the ongoing conflict in the Middle East continues putting upwards pressure on energy and other input costs for firms.
The Flash S&P Global US Composite PMI declined from 51.9 to 51.4 in March, marking its weakest reading since April 2025. While any figure above the 50-mark signals expansion, this marks the second straight month of slowing growth which could point to a slowdown in economic growth. The slowdown was mainly led by the services sector, where the Flash PMI dropped to 51.1, down from 51.7 in February.
Meanwhile, manufacturing activity improved with the flash PMI rising to 52.4 from 51.6 in February, as tariff-related impact started to wane. Despite some resilience in manufacturing, the overall private sector reported its first decline in employment since February 2025, as firms across the entire private sector attempt to trim overheads amid economic uncertainty.
Loss of business momentum in eurozone
Meanwhile, eurozone business activity slowed down considerably in March, with the latest PMI surveys released by S&P Global showing a loss of business momentum as surging energy prices push costs to their highest level in three years.
The eurozone composite PMI, which combines the manufacturing and services sectors, fell to 50.5, marking a sharp decline from 51.9 in February.
Economists have warned that this combination of weakening output and surging prices creates a classic stagflationary dynamic, a situation of high inflation and unemployment.
At the country level, Germany reported a PMI of 51.9 driven by its manufacturing sector. In contrast, France’s reading dropped to 48.3 putting it in contractionary territory.
Firms across the entire eurozone have faced the largest supplier delays since mid-2022, pushing up costs and weakening business outlook.
Policymakers at the European Central Bank (ECB) must walk a tightrope as they attempt to boost weakening economic activity while putting a lid on rising inflationary pressures.
UK business Activity slows sharply as Input Costs surge
Finally, UK business activity slowed as input costs surge.
According to the latest S&P flash PMI data, business activity in the UK has slowed sharply in March, expanding at the weakest pace in six months, while manufacturers reported the fastest rise in input costs since 1992. This is the first major survey to show the repercussions of the ongoing Middle Eastern conflict on British businesses.
The composite PMI declined sharply to 51.0 from 53.7 in February, reporting below all economists’ forecasts albeit above the 50-mark threshold.
The most notable point of the survey was the surge in manufacturing input costs which jumped to 70.2 from 56.0, marking the largest one-month increase since the sterling crisis in 1992.
Businesses have replied by raising their prices at the fastest rate since April 2025, exacerbating the problem for the Bank of England (BoE) as it seeks to tackle surging inflationary expectations.
Employment has also declined for the 18th consecutive month, marking the longest stretch of jobs losses since 2010.
The March PMI data points to a UK economy facing slower growth, rising costs and pessimistic business outlook, leaving policymakers little room to operate as geopolitical tensions persist.
This article does not constitute legal and/or financial advice and is being issued for information purposes only by Bank of Valletta plc, 58, Zachary Street, Valletta. Bank of Valletta is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap. 370 of the Laws of Malta).
