March manufacturing growth outpaces February
Economic activity in the manufacturing sector expanded in March for the third consecutive month, say the nation’s supply executives in the latest ISM Manufacturing PMI Report.
The report was issued today by Susan Spence, MBA, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.
“The Manufacturing PMI registered 52.7 percent in March, a 0.3-percentage point increase compared to the reading of 52.4 percent in February. The overall economy continued in expansion for the 17th month in a row. (A Manufacturing PMI above 47.5%, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index expanded for the third straight month after four straight readings in contraction, registering 53.5%, down 2.3 percentage points compared to February’s figure of 55.8%. The March reading of the Production Index (55.1%) is 1.6 percentage points higher than February’s reading of 53.5%.
"The Prices Index remained in expansion (or ‘increasing’ territory), registering 78.3%, a 7.8-percentage point jump from February’s reading of 70.5%. In the last two months, the Prices Index has increased19.3 percentage points to reach its highest level since a reading of 78.5 percent in June 2022. The Backlog of Orders Index registered 54.4%, down 2.2 percentage points compared to the 56.6 percent recorded in February. The Employment Index registered 48.7%, down 0.1 percentage point from February’s figure of 48.7%,” says Spence.
“The Supplier Deliveries Index indicated a further slowing for the fourth month in a row after one month in ‘faster’ territory. The reading of 58.9% is up 3.8 percentage points from the 55.1 percent recorded in February. (Supplier Deliveries is the only ISM PMI Reports index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)
“The Inventories Index registered 47.1%, down 1.7 percentage points compared to February’s reading of 48.8%. The Customers’ Inventories Index reading of 40.1 percent is a 1.3-percentage point increase compared to February.
“The New Export Orders Index reading of 49.9% is 0.4 percentage point lower than the reading of 50.3 percent registered in February and marks a return of this subindex to contraction territory. The Imports Index registered 52.6%, 2.3 percentage points lower than February’s reading of 54.9%.”
Spence continues, “In March, U.S. manufacturing activity remained in expansion territory, growing at a slightly faster pace than the month before. Of the five subindexes that make up the PMI, the New Orders Index indicated slower growth compared to the previous month, the Production Index grew at a faster rate, and the Employment and Inventories indexes remained in contraction. This month also marks the first report with panelists citing the Iran war as a new impact to their business, along with ongoing uncertainty with U.S. economic policy, despite the recent Supreme Court ruling striking down International Emergency Economic Powers Act (IEEPA) tariffs. In March, 64% of comments overall were negative. Among the negative comments, about 20 percent cited tariffs and about 40 percent the war in the Middle East. (Some panelists referenced both topics within a single comment or in mixed sentiment.).
“Two demand indicators (the New Orders and Backlog of Orders indexes) are in expansion, the New Export Orders Index returned to contraction, and the Customers’ Inventories Index remains in ‘too low’ territory, contracting at a slightly slower rate. A ‘too low’ status for the Customers’ Inventories Index is usually considered positive for future production.
“Regarding output, the Production Index is in expansion for the fifth month in a row, and the Employment Index decreased by 0.1-percentage point and remains in contraction. Among panelists, 55% indicated that managing head counts remains the norm at their companies, as opposed to hiring.
“Finally, inputs (defined as supplier deliveries, inventories, prices and imports) had mixed results. The Supplier Deliveries Index indicated increasingly slowing deliveries, the Inventories Index contracted at a faster rate, and the Prices Index took another big leap — to 78.3%, from 70.5% in February. The Imports Index lost 2.3 percentage points for a reading of 52.6%, compared to 54.9% in February.
“Looking at the manufacturing economy, 16% of the sector’s gross domestic product (GDP) contracted in March, compared to 21% in February, and the percentage of manufacturing GDP in strong contraction (defined as a composite PMI of 45% or lower) increased to 4%, compared to 1% in February. The share of sector GDP with a PMI at or below 45% is a good metric to gauge overall manufacturing weakness. Of the six largest manufacturing industries, four (Transportation Equipment; Computer & Electronic Products; Machinery; and Chemical Products) expanded in March,” says Spence.
The 13 manufacturing industries reporting growth in March — listed in order — are: Printing & Related Support Activities; Primary Metals; Transportation Equipment; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Textile Mills; Computer & Electronic Products; Fabricated Metal Products; Machinery; Paper Products; Nonmetallic Mineral Products; Wood Products; and Chemical Products. The three industries reporting contraction in March are: Plastics & Rubber Products; Furniture & Related Products; and Food, Beverage & Tobacco Products.
INDUSTRIAL SUPPLY MAGAZINE
The March/April issue of Industrial Supply magazine features an in-depth cover story about Pack-n-Tape. Plus, we're featuring articles by contributing writers Dr. Bharani Nagarathnam and Frank Hurtte, as well as interviews with numerous product and distribution industry experts.
