US Business Activity Plummets, Inflation Worries Soar

U.S. business activity plummeted in March, marking an eleven-month low, due to the Middle East wars impact on energy costs and inflation fears. The S&P Global survey revealed a decline in the overall output index to 51.4, the lowest since April 2021. Services sector suffered the most, with a drop to 51.1, while manufacturing barely edged up to 52.4. Private sector jobs also shrank for the first time in over a year, as businesses cut back amid uncertainty. Input costs surged to 63.2, driven by war-induced energy price hikes, which were then passed on to consumers, pushing output prices to 58.9 and hinting at inflation nearing 4%. Oil prices surged over 30%, and average gas prices rose nearly $1 per gallon nationwide. The Federal Reserve now anticipates higher inflation, with only one rate cut planned for this year. Economists caution the Fed on balancing rising prices and slowing growth, depending on how long the conflict disrupts energy supplies and global trade.

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