Manufacturing Economy Continues to Expand in March

Economic activity in the manufacturing sector expanded in March and the overall economy grew for the 107th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business. The March PMI registered 59.3 percent, a decrease of 1.5 percentage points from the February reading of 60.8 percent, but still above the 50-point mark indicating growth in the manufacturing economy.

The New Orders Index registered 61.9 percent, a decrease of 2.3 percentage points from the February reading of 64.2 percent. The Production Index registered 61 percent, a 1 percentage point decrease compared to the February reading of 62 percent.

The Employment Index registered 57.3 percent, an increase of 2.4 percentage points from the February reading of 59.7 percent. The Supplier Deliveries Index registered 60.6 percent, a 0.05 percent decrease from the February reading of 61.1 percent. The Inventories Index registered 55.5 percent, a decrease of 1.2 percentage points from the February reading of 56.7 percent. The Prices Index registered 78.1 percent in March, a 3.9 percentage point increase from the February reading of 74.2 percent, indicating higher raw materials prices for the 25th consecutive month.

Comments from the ISM panel reflect continued expanding business strength. “ … Demand remains robust, with the New Orders Index at 60 or above for the 11th straight month, and the Customers’ Inventories Index at its lowest level since July 2011. The Backlog of Orders Index continued a 14-month expansion with its highest reading since May 2004, when it registered 63 percent. Consumption, described as production and employment, continues to expand, with indications that labor and skill shortages are affecting production output. Inputs, expressed as supplier deliveries, inventories and imports, were negatively impacted by weather conditions; Asian holidays; lead time extensions; steel and aluminum disruptions across many industries; supplier labor issues; and transportation difficulties due to driver and equipment shortages. Export orders remained strong, supported by a weaker U.S. currency. The Prices Index is at its highest level since April 2011, when it registered 82.6 percent. In March, price increases occurred across 17 of 18 industry sectors. Demand remains robust, but the nation’s employment resources and supply chains are still struggling to keep up,” according to Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, who issued the report.

Of the 18 manufacturing industries, 17 reported growth in March, in the following order: Fabricated Metal Products; Plastics and Rubber Products; Computer and Electronic Products; Paper Products; Printing and Related Support Activities; Nonmetallic Mineral Products; Transportation Equipment; Petroleum and Coal Products; Wood Products; Machinery; Chemical Products; Textile Mills; Electrical Equipment; Food, Beverage and Tobacco Products; and Primary Metals. One industry reported a decrease during the period: Apparel, Leather and Allied Products.

For more information, visit www.ism.org.