Economic indicator reports released in the month of April reveal that U.S. manufacturers are continuing to grapple with waning demand and supply chain issues. However, multiple regional surveys suggest things may be improving for the sector. Get the latest data on regional performance, manufacturing output and capacity utilization, prices, optimism, and more in our roundup of the most important manufacturing business reports released in April.
Executive Summary
• With the exception of the apparel, petroleum & coal, and paper industries, all U.S. industrial sectors posted output declines in March.
• U.S. manufacturing activity fell further into contraction in March, marking a 5th straight month of negative readings.
• However, regional surveys reveal an improving manufacturing climate, with activity rebounding out of contraction nearly across the board. The New York and Texas regions reported the most-improved climates.
• U.S. manufacturing employment declined for a second straight month, though declines were not as sharp in March as in February (-1,000 jobs vs -4,000 jobs).
• Unfilled manufacturing jobs in the U.S. declined to 644,000 open positions.
• Two of the six largest sectors surveyed by the ISM--petroleum products and machinery—posted growth in March.
Manufacturing Output Declines Slightly
U.S. manufacturing production declined marginally in March, down 0.5%, according to the Federal Reserve’s Industrial Production and Capacity Utilization report released April 14th. Meanwhile, the index for mining also fell 0.5%, while the utilities index spiked 8.4%. The Fed’s overall industrial output index for March was largely unchanged over February, edging up 0.4%.
Meanwhile, manufacturing capacity utilization edged down 0.5% in March to a reading of 78.1%. The Fed notes this is 0.1% below the sector’s long-run average.
Manufacturing sectors that saw increases in capacity utilization in March included apparel and leather, petroleum and coal products, and aerospace equipment. Decreases in capacity utilization were seen largely across the board, sharpest in nonmetallic mineral products; wood products, electrical equipment; and motor vehicles & parts.
Most U.S. industrial sectors posted marginal losses in output in March, with the exception of apparel and leather, which rose 2% and petroleum & coal products, up 1.3%. Paper products also notched up slightly, increasing by 0.8%.
Output declines were sharpest in wood products, down 2.9%; nonmetallic mineral products, down 2.6%; and electrical equipment, down 1.7%.
Notably, the U.S. apparel and leather industry was the clear winner for year-over-year output gains, up 9.3% over this time last year.
Manufacturing Employment Posts Second Straight Month of Losses
Job creation in the U.S. manufacturing sector continued to stall in March, according to the latest jobs report by the U.S. Department of Labor. The sector shed another 1,000 positions in March, following a 4,000-job loss in February.
Read more: What the March Jobs Report Tells us About Hiring Trends in Manufacturing
In March, employment losses were sharpest in fabricated metals, which shed 4,100 positions. Semiconductors, computer and electronic products, and electrical equipment also saw employment declines.
These losses were offset by gains in the transportation equipment sector, which rose by 6,400 jobs. Machinery manufacturing, primary metals, and computer equipment also added jobs.
Meanwhile, the latest JOLTS (Job Openings and Labor Turnover Survey) reported the number of unfilled job openings in the sector fell to 644,000.
The Bureau of Labor Statistics reported on March 15th, that its Producer Price Index (PPI) for final demand goods decreased 1% in March. This follows a 0.2% decrease in February and a 1.2% increase in January.
Manufacturing Activity Contracted Further in March
Meanwhile, the U.S. manufacturing sector posted its fifth straight month of contraction, according to the latest survey by the Institute for Supply Management released April 1st.
The ISM reports manufacturing activity fell another 1.4% in the third month of the year. New orders fell 2.7%, to a reading of 44.3%, suggesting the sector is still grappling with waning demand. Employment and prices also contracted. Output advanced slightly, up 0.5%, but still remains in contraction territory.
Timothy Fiore, Chairman of the ISM, noted sluggishness in the sector was continuing to show signs of improvement, while comments from manufacturers were mixed.
Six of eighteen industries surveyed by the ISM reported growth in March, while two of the six largest manufacturing industries (petroleum & coal products and machinery) reported growth.
Related: Selling in a Downturn: Opportunities & Best Practices
Regional Surveys Suggest Improved Business Climate
New York Manufacturing Survey In a surprise turnaround, Manufacturing activity in the New York region increased in April, according to the latest Empire State Manufacturing Survey. After declining for five straight months, the survey finds the general business conditions index for manufacturers in the region surged 35 points to a reading of 10.8.
The report found new orders and shipments shot up, while delivery times held steady and inventories moved higher.
Richmond Fed Manufacturing Survey Manufacturing activity in the 5th District, which includes Maryland/D.C.; North Carolina, South Carolina, Virginia and most of West Virginia, also reported improved business conditions, with the survey’s composite manufacturing index rising from -15 in February to -5 in March.
Both new order and employment improved in March, although both remain in negative territory.
Kansas City February Manufacturing Survey. Factory activity in the 10th district (encompassing Kansas, Colorado, Nebraska, Oklahoma, Wyoming, northern New Mexico and Western Missouri) remained flat in March, posting a reading of “0” –unchanged over February’s “0” reading and January’s -1 reading.
The reports finds decreased activity at non-durable goods plants, particularly in printing, plastics, and chemical manufacturing. Meanwhile, food manufacturing showed signs of improvement.
Texas Manufacturing Outlook Survey After contracting for the first time since the pandemic in February, Texas manufacturing activity bounced back, with the production index—a key measure of the state’s manufacturing business conditions—rose from -2.8 to 2.5.
Capacity utilization rebounded into expansion, hitting a level of 2.3%, while the employment index shot up 11 points to a reading of 10.4%.
However, demand remained depressed, with the new orders index coming in at -14.3%.
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