US factory activity surges in March, but cost pressures mount

U.S. manufacturing activity surged in March, posting its strongest expansion since 2022, but rising input costs are casting a shadow over the sector’s momentum, Bloomberg writes.  

The Institute for Supply Management’s index showed factory activity climbing alongside a sharp jump in prices paid, which reached their highest level in nearly two years.

The spike is largely tied to global supply disruptions stemming from the war with Iran, including constraints in the Strait of Hormuz that have driven up oil and raw material costs. While production and new orders improved and a majority of industries reported growth, manufacturers are increasingly grappling with longer lead times and elevated expenses.

Economists warn the surge in input costs could translate into higher prices for consumers, keeping inflation pressures elevated in the months ahead, even as overall factory activity shows renewed strength.

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