March sees manufacturing gains, says ISM

March manufacturing output finished on an upswing in the first quarter, according to the monthly manufacturing Report on Business, which was issued today by the Institute for Supply Management (ISM).

The report's key metric, the PMI, headed up 1.1% to 55.3 (a reading of 50 or higher indicates growth), following a 2.4% decrease from January to February and a 2.3% increase from December to January. Despite the uneven pattern in recent months, the index has now grown for 31 consecutive months, with the overall economy now having grown for 119 consecutive months. The March PMI reading is down 2.4% compared to the 12-month average of 57.7, and the first quarter PMI is 55.4.

ISM reported that 16 of 18 manufacturing sectors reported overall growth in March, including: Printing and Related Support Activities; Textile Mills; Food, Beverage and Tobacco Products; Petroleum and Coal Products; Computer and Electronic Products; Electrical Equipment, Appliances and Components; Furniture and Related Products; Chemical Products; Plastics and Rubber Products; Wood Products; Nonmetallic Mineral Products; Transportation Equipment; Miscellaneous Manufacturing; Fabricated Metal Products; Primary Metals; and Machinery. The two industries reporting contraction in March are: Apparel, Leather and Allied Products; and Paper Products.

Including the PMI, the majority of the report's key metrics saw gains in March.

New orders, which are commonly referred to as the engine that drives manufacturing, rose 1.9% to 57.4, growing for the 39th consecutive month, with gains recorded for the top six industry sectors and 14 of the 18 sectors tracked by ISM.

Production, at 55.8, was up 1%, growing for the 31st consecutive month, and employment, at 57.5 saw a 5.2% gain, on the growth path for the 30th consecutive month and hitting its highest rating since checking in at 57.7 in November 2018. Supplier deliveries, at 54.2 (a reading above 50 indicates contraction) decreased at a slower rate, by 0.7% for the 37th consecutive month. Inventories, at 51.8, slipped 1.6%, growing for the 15th consecutive month.

Comments submitted by ISM members for the report were optimistic, for the most part.

A textile mills member said customer orders remain strong, and that was echoed by a food, beverage and tobacco products member. A plastics and rubber products member cited “awaiting with anticipation the outcome of the U.S.-China trade deal.”

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