U.S. ISM Manufacturing Index Declines Sharply in March
by:Tom Moeller
|in:Economy in Brief
Summary
- Index hits three-year low.
- Employment, new orders & supplier deliveries pace the decline.
- Pricing power weakens.
The U.S. ISM manufacturing index declined to 46.3 during March from 47.7 in February and 47.4 in January, according to the Institute for Supply Management. The latest figure was the fifth consecutive month below the break-even level of 50 and it remained under the peak of 63.8 in March 2021. The figure remained at the lowest level since May 2020. The Action Economics Forecast Survey expected 47.5 for March.
Movement amongst the component series was mixed last month. The employment index fell to 46.9 from 49.1, placing it at the lowest level since July 2020. The figure peaked at 56.9 in March 2021. A fairly steady 13.7% (NSA) of respondents reported higher employment but an increased 17.0% reported decline.
The inventories series plunged to 47.5 last month from 50.1. The latest was down from 56.6 in July of last year. The new orders index declined to 44.3 in March from February’s 47.0, off from 54.3 twelve months earlier. It was the seventh consecutive month below the break-even level of 50. A lessened 19.6% (NSA) of respondents reported higher new orders last month while an increased 24.4% reported a decline. The supplier delivery series eased to 44.8 from 45.2 in February. Its peak was 78.8 in May 2021. A lessened 8.2% of respondents reported slower delivery speeds while 18.6% reported them faster.
Working slightly higher was the production index to 47.8 from 47.3 in February. It stood at 55.1 twelve months earlier. A marginally increased 17.6% (NSA) of respondents reported higher production levels while a lessened 19.2% reported decline.
The prices index fell to 49.2 (NSA) in March from 51.3 in February. It stood well below its high of 92.1 in June of 2021, though it remained above the December 2022 low of 39.4. A lessened 21.4% (NSA) of respondents reported higher prices while an increased 23.0% reported price declines.
In other ISM series, the new export orders index fell to 47.6 in March from 49.9 in February. It remained down from its recent high of 57.1 in February 2022. The imports index fell to 47.9 from 49.9 in February. It was below the high of 61.0 in June 2021. The order backlog index weakened to 43.9 from 45.1 and stood below the level of 60.0 twelve months earlier.
The ISM figures are based on responses from over 400 manufacturing purchasing executives from 20 industries, which correspond to their contribution to GDP in 50 states. These data are diffusion indexes where a reading above 50 indicates expansion. The figures from the Institute for Supply Management can be found in Haver's USECON database; further detail is found in the SURVEYS database. The expectations number is available in Haver's AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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