Solid Manufacturing Results for March, ISM Finds

PMI, new orders, production, and employment indexes all stronger

The Institute for Supply Management reports the U.S. manufacturing sector’s economic activity increased in March, the 32nd consecutive month for an expansion of that economic sector, which is based on a regular survey that includes purchasing managers across 18 industries. The survey also concluded that the overall economy grew for the 34th consecutive month.

The March manufacturing-sector result improved the rate of growth over the February ISM figure, which, though positive, was considered tepid by many analysts.

The ISM surveys purchasing managers (PMI) to gauge activity and conditions in 18 manufacturing sectors. It also tracks new orders, production, employment, supplier deliveries, inventories, customers’ inventories, prices, order backlogs, exports, and imports. The rate of change in activity on these conditions varied in March, though the production index and employment index were notably stronger than in February, and growing faster. Producer inventories were found to be unchanged from the previous month, and customers’ inventories were determined to be “too low.”

"The PMI registered 53.4%, an increase of one percentage point from February's reading of 52.4%,” noted Bradley J. Holcomb, the chairman of ISM’s Manufacturing Business Survey Committee. The survey’s technique identifies any result over 50% as an increase, though the rate of growth will show comparative strength or weakness from month to month.

“The Production Index increased three percentage points from February's reading of 55.3% to 58.3%,” Holcomb detailed, “and the Employment Index increased 2.9 percentage points to 56.1%.

“Of the 18 industries included in the survey, 15 are experiencing overall growth,” Holcomb reported, adding that comments from the ISM manufacturing panel included several indications of citing increased sales and demand for the next few months.

Industrial segments in the ISM index that reported growth in March include apparel, leather and allied products; nonmetallic mineral products; primary metals; petroleum and coal products; paper products; machinery; miscellaneous manufacturing; wood products; furniture and related products; transportation equipment; plastics and rubber products; food, beverage and tobacco products; printing and related support activities; fabricated metal products; and electrical equipment, appliances, and components.

Two industries that reported contraction in March are: computer and electronic products; and chemical products.

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