A batch of upbeat U.S. economic releases on April 1 gave the dollar a lift, as better-than-expected retail sales and two solid manufacturing readings helped markets look past rising geopolitical anxiety over the Iran war.
February Retail Sales: Consumer Bounces Back Before the Storm
February retail sales finally snapped a three-month skid, rising 0.6% and beating the 0.4% forecast.
The bounce had some real breadth. Autos saw their strongest gain since last summer, online shopping stayed steady, and restaurants bounced back after two months in the red.
Not everything joined the party, though. Grocery stores took a notable hit, marking their sharpest drop since August 2020, while furniture sales stayed soft, which lines up with the still-struggling housing backdrop.
Key Takeaways
- U.S. retail sales rose 0.6% in February, topping the 0.4% forecast and recovering from a revised -0.1% in January
- The “control group” — a key GDP input stripping out autos, gas, and building materials — climbed 0.5%, above the 0.2% prior reading
- Gains were broad-based across nearly all categories; only groceries (-1.0%) and furniture (-1.0%) declined
- Sales Breakdown
- Total retail sales: $738.4 billion, +0.6% m/m, +3.7% y/y
- Autos: +1.2% (highest since last summer)
- Department stores: +3.0%; Clothing: +2.0%; Health & personal care: +2.3%
- Online (nonstore retailers): +0.7%; Restaurants: +0.4%
- Groceries: -1.0% (biggest drop since August 2020); Furniture: -1.0%
Economists were quick to point out one big caveat. This data came in before the U.S.-Israel war with Iran kicked off in early March. That is, the report doesn’t capture any drag from higher energy prices or rising geopolitical tensions.
That 0.5% gain in the control group, which feeds into GDP, suggests consumers were still spending at a decent clip early in Q1. But markets are treating it more like a clean pre war snapshot than something you can confidently carry forward.
Link to official U.S. Census Bureau Retail Sales Report (February 2026)
S&P Global Final Manufacturing PMI: Resilience, but Costs Climbing
The S&P Global PMI final March print came in at 52.3, just a touch below the 52.4 flash estimate but still a solid step up from February’s 51.6.
Under the hood, output and new orders both picked up. Some of that strength looks tied to precautionary stockpiling, with firms rushing to secure supply ahead of potential war-driven disruptions.
That said, the momentum was mostly domestic. International orders kept shrinking, weighed down by tariffs and ongoing shipping delays through the Strait of Hormuz.
On the cost side, things got noticeably uglier. Input prices jumped to their highest level since August, with rising fuel and energy costs piling on top of tariff pressure on aluminum and steel. Factory gate inflation pushed up to a seven-month high as manufacturers passed along those costs where they could.
Key Takeaways
- Final March PMI printed at 52.3, slightly below the 52.4 flash estimate but up from 51.6 in February
- Eighth consecutive month of expansion; output and new orders both accelerated
- Input price inflation hit its highest since August; factory gate prices rose to a 7-month high
- International sales continued to fall, weighed by tariffs and shipping disruptions tied to the Strait of Hormuz
Chris Williamson, Chief Business Economist at S&P Global, said the resilience so far likely reflects easing tariff concerns and expectations that the war’s impact will be short-lived. Still, he was quick to point out that outlook is far from certain.
Link to official S&P Global U.S. Manufacturing PMI (March 2026)
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ISM Manufacturing PMI: Third Straight Month of Growth, but Prices Surge to 4-Year High
ISM Manufacturing PMI showed activity expanding for a third straight month, with the headline reading edging up to 52.7 and coming in above expectations.
Production picked up, and customer inventories stayed lean, which is usually a positive signal for future output. But let’s be real, the conversation was all about prices. The Prices Paid index jumped to 78.3, its highest level since June 2022. That surge was driven by higher petroleum-based products tied to the Middle East conflict, on top of already elevated costs for steel, aluminum, and tariffs.
Meanwhile, New Export Orders slipped back into contraction at 49.9, highlighting ongoing trade frictions. Supplier Deliveries also slowed for a fourth straight month, which suggests war-related shipping disruptions are already making their way through supply chains.
Key Takeaways
- ISM Manufacturing PMI rose to 52.7 in March, up 0.3 points from February’s 52.4 and above the 52.3 consensus
- Third consecutive month of expansion following a 10-month stretch of contraction
- Prices Paid surged 7.8 points to 78.3 — its highest reading since June 2022
- Employment stayed in contraction for a 30th straight month (48.7); New Export Orders slipped back below 50
- Index Breakdown
- Manufacturing PMI: 52.7 (vs. 52.3 expected; prior 52.4)
- Production: 55.1; New Orders: 53.5; Backlog of Orders: 54.4
- Prices Paid: 78.3 (+7.8 pts) — highest since June 2022
- Employment: 48.7; Supplier Deliveries: 58.9; New Export Orders: 49.9 (back in contraction)
Susan Spence, Chair of Institute for Supply Management, noted that 64% of panelist comments in March were negative. About 40% of those specifically pointed to the Iran war.
Link to official ISM Manufacturing PMI (March 2026)
Market Reactions
U.S. Dollar vs. Major Currencies: 5-min
USD Overlay 5-min – Chart Faster with TradingView
The U.S. dollar, which drifted lower through most of the early London session, briefly spiked higher after the 8:30 AM ET retail sales release before easing again ahead of the U.S. PMI prints.
The S&P Global PMI final manufacturing reading came in slightly below the flash estimate but still above February levels, offering modest support for the dollar.
The ISM Manufacturing PMI release at 10:00 AM marked a more durable shift. Despite the headline beat, weaker New Export Orders and a 30th straight month of employment contraction weighed more on sentiment than strong production. Most USD pairs extended losses, with EUR/USD reaching intraday highs within the hour.
The mid-tier reports generally supported continued U.S. dollar buying, but the Greenback didn’t regain traction until after the London close, likely as shorts were trimmed ahead of remarks from U.S. President Donald Trump scheduled for 9:30 PM ET.
Focus now turns to Friday’s March jobs report, the first major labor market read since the Iran war began. Fed rate cut expectations remain cautious, as rising input costs reflected in both ISM and S&P Global surveys complicate the outlook.
The March ISM Services PMI, due April 3, will also be closely watched for signs that war-related pressures are spilling into the services sector.
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