The IHS Markit Flash U.S. Manufacturing PMI rose from 55.3 in February to 55.7 in March, its best reading in three years. One of the key drivers of that higher headline number was employment (up from 55.0 to 55.6), with hiring continuing to expand strongly amid tightness in the overall labor market.

In addition, manufacturers were very optimistic about future output (up from 69.5 to 74.1), with that index rising to its highest point since February 2015. Interestingly, most of the other measures of activity eased in March, while remaining encouraging. This included new orders (down from 57.0 to 56.3), output (down from 55.5 to 55.2) and exports (down from 51.9 to 51.0). On the downside, raw material prices (up from 60.9 to 64.9) picked up in the latest survey, with costs expanding at rates not seen since September 2011.

Meanwhile, manufacturing activity in Europe slowed to an eight-month low despite continuing to show signs of modest growth overall. The IHS Markit Flash Eurozone Manufacturing PMI declined for the third straight month from 58.6 in February to 56.6 in March. The underlying data reflected decelerating activity across the board, including for new orders (down from 58.0 to 55.4), output (down from 59.6 to 56.1), exports (down from 57.0 to 54.7) and employment (down from 57.4 to 56.4). Manufacturers in Europe remain mostly upbeat production over the next six months, even with some more easing in the index of future output (down from 67.1 to 64.9). Input costs (down from 68.7 to 65.6) also remained highly elevated despite being somewhat slower in March.

In addition to data on Europe as a whole, IHS Markit also released figures for France (down from 55.9 to 53.6) and Germany (down from 60.6 to 58.4), both of which slowed to multi-month lows on weaker—but still reassuring —demand and output growth.

Final data on each of these surveys will be released on April 2.

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