According to the latest Manufacturing ISM® Report On Business® from the nation’s supply executives, the manufacturing sector’s economic activity shrank in March for the fifth consecutive month after 28 months of gain. The Manufacturing PMI® was 46.3 percent in March, 1.4 percentage points less than the level of 47.7 percent seen in February, indicating a contraction in the U.S. manufacturing sector. This continues a declining trend that started in June 2022 and is in its fifth month. No one of the five subindices that directly influence the Manufacturing PMI® was in a growth zone. The PMI® recorded its lowest score this month since May 2020. (43.5 percent). Two of the six largest manufacturing sectors—Machinery and Petroleum & Coal Products—saw growth in March. The Index of Production logged a contraction for a fourth month. According to Fiore, none of the ten subindices were up for the time period. If the percentage is greater than 50%, the manufacturing sector is generally expanding; if it is lower than 50%, it is generally shrinking.
Throughout time, a Manufacturing PMI® above 48.7% typically denotes a growth of the entire economy. As a result, following 30 consecutive months of growth, the March Manufacturing PMI® shows that the total economy shrank in March for a fourth straight month. According to Fiore, “the Manufacturing PMI® has historically tracked changes in real gross domestic product (GDP) on an annualised basis, and the March figure (46.3 percent) equates to a decrease of minus-0.9 percent in real GDP.”
The document was released today. by Timothy R. Fiore, CPSM, C.P.M., Chair of the Manufacturing Business Survey Committee for the Institute for Supply Management® (ISM®):
“The Manufacturing PMI® for March registered 46.3 percent, down from the 47.7 percent seen in February by 1.4 percentage points. This number represents the fourth month of recession for the total economy following a 30-month growth. The Manufacturing PMI® has dropped to its lowest point since May 2020, when 43.5 percent was recorded. At 44.3 percent, down 2.7 percentage points from the 47 percent reported in February, the New Orders Index remained in contractionary territory. As comparison to February’s reading of 47.3 percent, the Production Index reading of 47.8 percent represents an increase of 0.5 percentage points. The Prices Index read 49.2 percent, a decrease of 2.1 percentage points from the 51.3 percent recorded in February. The Backlog of Orders Index recorded 43.9 percent, down 1.2 points from the figure of 45.1 percent in February. The Employment Index dropped 2.2 percentage points from February’s reading of 49.1 percent, remaining in contraction zone at 46.9 percent. The Supplier Deliveries Index value of 44.8 percent, which is the lowest since March 2009, is 0.4 percentage points lower than the 45.2 percent reported in February (43.2 percent). 2.6 percentage points less than the February reading of 50.1 percent, the Inventory Index entered recession at 47.5 percent. The New Export Orders Index score of 47.6% is 2.3 points lower than the reading of 49.9% from February. At 47.9, the Imports Index remained in negative territory. %, which is 0.2 percentage points less than the 49.9 % reported in February.
The U.S. manufacturing sector shrank once more, according to Fiore, and the Manufacturing PMI® fell from the previous month. The March composite index result represents businesses continuing to slow outputs to better fit demand for the first half of 2023 and get ready for growth in the late summer/early fall timeframe. Business Survey Committee respondents reported softening new order rates during the preceding 10 months. With the (1) New Orders Index shrinking more quickly, (2) New Export Orders Index still below 50% and dropping, (3) Customers’ Inventories Index at the high end of a “just right” level, which is bad for future production, and (4) Backlog of Orders Index slipping once more, demand softened and on in contraction. The Production and Employment indices both showed negative output/consumption, which had a combined negative 1.7 percentage point impact on the Manufacturing PMI® computation.
