A monthly survey released on Tuesday indicated that the pace of expansion in the U.S. private sector slowed this month, as businesses reported a slight weakening in the rebound of new orders and a surge in prices following the outbreak of conflict in the Middle East.

The preliminary S&P Global U.S. Composite Purchasing Managers' Index (PMI) fell to 51.4 this month from 51.9 in February. This index is based on surveys of approximately 650 manufacturers and 500 service providers. A reading above 50 signifies continued growth in activity.

"The additional uncertainty from the conflict and the impact on the cost of living have dampened demand, according to business reports," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

The survey noted that the service sector was more significantly impacted, while manufacturers reported a rebound in output and new order growth.

Employment levels declined for the first time in over a year, as businesses generally sought to reduce overhead costs amid an uncertain economic environment. Meanwhile, average input costs rose sharply again, marking the largest monthly increase in ten months. This increase was passed on to average selling prices, which saw their largest rise since August 2022.

The survey also stated, "At the same time, due to concerns that the conflict could lead to more persistent supply issues and price increases, companies are building safety stocks while cutting staff numbers to lower overhead expenses."