The Purchasing Managers’ Index (PMI) rose 1.1 percentage points to 55.3% in March, from February, according to the Institute for Supply Management (ISM). A reading above 50% indicates the manufacturing economy is expanding and below 50% indicates it’s contracting.
The new orders index rose 1.9 percentage points to 57.4%, the production index increased 1 percentage point to 55.8%, the employment index rose 5.2 percentage points to 57.5%, the supplier deliveries index fell 0.7 percentage points to 54.2%, the inventories index declined 1.6 percentage points to 51.8% and the prices index increased 4.9 percentage points to 54.3%, showing raw material prices rose after two months of declines.
Business strength continues to expand and was supported by increases in new orders and employment, according to the ISM. Demand expansion continued as new orders reached the high 50s, the customers’ inventories index improved but remained too low and the backlog of orders index softened to marginal expansion levels. Consumption, which comprises production and employment, continued to increase, up 6.2 percentage points from February. Inputs, which are supplier deliveries, inventories and imports, declined largely because inventory consumption exceeded inputs, leading to a 2.3 percentage point decline in supplier deliveries and inventories indexes and negatively affected the PMI. Overall, inputs show an easing business environment but to a lesser extent than in February, as the prices index rose. Exports orders rose at marginal levels.
Following 16 of 18 manufacturing industries reported growth in March: 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 industries that contracted were apparel, leather and allied products and paper products.