The S&P Global US Composite Purchasing Managers' Index came in at 53.5 in March, up from 51.6 in February.

The US Manufacturing PMI was 49.8 in March, compared to 52.7 in February, and below expectations for 51.8 in the Econoday survey of forecasters.

The US Services PMI Business Activity Index recorded 54.3 in March, up from 51.0 in February, and above expectations of 51.2.

The noticeable upturn in service sector activity offset a renewed fall in manufacturing output. The rise in service sector output was the largest so far this year, with companies reporting improved new business inflows amid some signs of strengthening customer demand and better weather. Manufacturing output meanwhile fell into decline, as factories reported fewer instances of output having been boosted by the front-running of tariffs, and new orders growth came close to stalling in the goods-producing sector.

Overall, business expectations for the year ahead fell to their second lowest since October 2022 as companies grew increasingly cautious about the economic outlook, often citing worries over customer demand and the impact of aspects of the new administration's policies, the report said.

Employment growth was also subdued due to increased uncertainty about the economic outlook and concerns over rising costs. Input price inflation accelerated sharply, especially in manufacturing, to a near two-year high, often attributed to the impact of tariff policies.

However, competition limited the pass-through of higher costs to selling prices, the report added.

Manufacturing index seen lower but still expansionary at 51.8 and services slightly better at 51.2.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector output by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around 10 days ahead of the final report and are typically based upon around 85 percent of the full survey sample. The report tracks changes in variables such as new orders, stock levels, employment and prices across both manufacturing and services. Production is also tracked, defined as"production" for manufacturing and"output" for services. Results are synthesized into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster output is growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The data are produced by S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.