US Manufacturing Growth Stalls in March Amid Tariff Concerns

Output slips, hiring stagnates, and cost pressures mount as policy uncertainty weighs on factories.

The US manufacturing sector lost steam in March, with growth stalling amid rising input costs and growing concerns over upcoming tariffs. According to the latest data from S&P Global, the seasonally adjusted Manufacturing PMI® dipped to 50.2 from 52.7 in February, marking the weakest improvement in factory conditions so far in 2025.

Though the PMI reading stayed above the neutral 50.0 level for the third month in a row, the slowdown was notable. Factory output contracted for the first time since December, ending the strong expansion seen in February. Businesses cited fading momentum from earlier tariff-related production increases and growing uncertainty around federal government policies.

Key March Developments:

• Output Decline: Production fell following February’s sharp expansion, as firms that previously ramped up activity to front-run tariffs pulled back. Uncertainty over implementation timelines and potential economic impacts dampened factory activity.
• Slower New Orders: New orders continued to rise but at the weakest pace so far this year. While domestic demand held up, concerns about future costs and policy shifts kept buyers cautious. Export orders stabilized after months of contraction, with new demand from Asia, Canada, and Europe.
• Hiring Stalls: Employment remained unchanged in March, ending four consecutive months of job growth. Many manufacturers paused hiring amid weaker workloads and growing cost burdens.
• Weakening Business Confidence: Optimism dropped for the second straight month, reaching its lowest point since December. Some firms hoped for long-term gains from protectionist policies but remained concerned about immediate cost pressures and supply chain disruptions.
• Rising Cost Pressures: Input costs surged at the fastest rate since August 2022, largely driven by higher metal prices, particularly steel, as a result of new tariffs. Selling prices also rose, with output price inflation hitting a 25-month high.
• Supply Chain Disruptions: Despite slowing demand, supplier lead times extended for the sixth consecutive month, driven by customs delays and vendor stock shortages. Many firms reduced purchasing activity and drew from inventories instead.

Backlogs of work continued to decline, reflecting ongoing weak demand. March also marked the fastest drop in outstanding orders since December, adding to signs of a cooling manufacturing environment.

In a Nutshell

Manufacturing in the US entered a slower gear in March, as rising costs, trade policy uncertainty, and softer demand combined to weigh on business conditions. While some manufacturers saw modest export growth and signs of domestic resilience, the broader outlook remains clouded by inflationary pressures and cautious investment behavior.

Source: SP Global