After slipping several notches in February, U.S. manufacturing activity bounced back in March, led by a spike in new orders, hiring, and production according the Institute for Supply Management’s latest survey of manufacturing executives.
U.S. manufacturing activity now stands at 55.3%, up 1.1% from February’s reading of 54.2%.
Says Tim Fiore, Chairman of the ISM: “Comments from the panel reflect continued expanded business strength, supported by gains in new orders and employment.”
Fewer new orders, and a slowdown in hiring impacted February’s reading, while a significant drop in production dragged down the overall index. Weather conditions played a part in February’s cooler reading.
Related: U.S. manufacturing activity cools in February
However, industrial activity returned to a brisk pace in March, with manufacturing firms ramping up production and expanding hiring. Overall March stands as the 37th consecutive month of growth in the U.S. manufacturing sector, and the 119th straight month of growth in the economy overall.
Sixteen of eighteen industries surveyed by the ISM in March reported growth. Leading the way was printing & related support activities; textile mills; computer & electronic products; electrical equipment; and fabricated metal products.
The only sector that reported a contraction in the month of March was apparel, leather and allied products, as well as paper products.
New orders rebound
The ISM’s New Orders Index, which stumbled in February, climbed 1.9% to its current level of 55.5%. Despite February’s setback, the index has remained in expansion territory for 36 consecutive months, meaning it has read above the 50% mark that defines expansion.
Fourteen out of eighteen industries reported growth in new orders, according to the ISM. New order growth was led by wood products, printing and related support activities; food, and beverage & tobacco products.
Employment surges
The ISM’s employment index, which had also eased in February, surged 5.2% in March, hitting a level of 57.5%. Says Fiore, “Employment continued to expand, improving on February’s performance and achieving its highest expansion level since November 2018, when the index registered 57.7.”
Manufacturing in the U.S. has been growing consistently for the past several years, but expanded at a faster pace in 2018, adding 261,000 jobs in that year alone, according to the Department of Labor.
March stands as the 31st consecutive month of manufacturing employment expansion recorded by the ISM.
Out of eighteen industries surveyed by the ISM, thirteen reported expanded hiring, and was greatest in textile mills; wood products; furniture/related products; and printing/related support activities.
Production recovers
After plummeting 5.7% in February, the ISM’s Production Index inched up a notch, growing by 1 percentage point to 55.8%. Well above the 50% mark that indicates expansion, manufacturing production has been in growth mode for 31 consecutive months, according to the ISM.
Related: U.S. industrial output climbs, but manufacturing sputters
Nine out of eighteen industries reported production hikes, led by food, beverage & tobacco products; printing and related support activities; nonmetallic mineral products; textile mills; and computer & electronic products.
Additonal growth metrics
The ISM’s manufacturing activity index covers a multitude of growth metrics, which overall point to an industrial sector that is steadily growing. Most categories, including new orders, production, employment, exports, and supplier deliveries are expanding, though some at a slower or faster rate.
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Additional items covered by the ISM include inventories, which decreased 1.6% from February, but still registers an expansionary reading of 51.8%. Customer inventories grew 3.7% to 42.7%, while a metric that measures backlogs of orders decreased 1.9% to 50.4.
New exports decreased 1.1% to 51.7%, while imports sank 4.2% to 51.1.
About the ISM
The Institute for Supply Management® (ISM®) is the first and largest not-for-profit professional supply management organization worldwide. Founded in 1915, ISM has over 50,000 members located in 100 countries.
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