US business activity rises in March, but sentiment deteriorates further

US business activity picked up in March, but growing fears over import tariffs and deep government spending cuts continued to weigh on sentiment and prospects for the rest of the year.

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The survey from S&P Global on Monday also showed a measure of prices paid by businesses for inputs surging this month to the highest level in nearly two years, with increases in both manufacturing and services industries. Companies also appeared reluctant to raise headcount.

The improvement in activity will probably do little to assuage fears that the economy was staring at a period of very slow growth and high inflation. Consumer sentiment has also deteriorated as households worry about the future.

President Donald Trump has imposed a raft of tariffs on imported goods since returning to the White House, with some duties delayed until next month. The Trump administration has also embarked on an ambitious campaign to drastically cut government spending, firing thousands of public workers, though some have been ordered reinstated by courts.

"Business confidence in the outlook has also darkened... largely caused by growing worries over negative impacts from recent policy initiatives from the new administration," said Chris Williamson, chief business economist at S&P Global Market Intelligence. "Most widely cited were concerns about the impact of federal spending cuts and tariffs."