ISM: US manufacturing grew slightly in March

U.S. manufacturing expanded slightly last month, according to the latest figures from the Institute for Supply Management. The group’s headline figure increased by 0.3 points to 52.7%, indicating slightly faster growth in the sector. Indexes tracking U.S. manufacturing production and orders increased but were held back by near-flat manufacturing employment. Despite the positive top figure, survey comments suggest manufacturers in certain industries were alarmed by the beginning of a war with Iran and apprehensive about its affect on operations.

The ISM’s headline figure, a manufacturing PMI of 52.7% up 0.3 points from February, indicates manufacturing is growing faster than it was last month. The March production index similarly grew at a faster rate as it ascended 1.6 points to 55.1%. New orders continued to grow, but at a slower rate, losing 2.3 points to land at 53.5%. The employment index contracted at a slightly faster rate as its metric fell by 0.1 points to 48.7%; The employment index has contracted every month for the past 30 months.

Other metrics showing long-term trends included customer inventories and price increases: customer inventories have been deemed “too low” for 18 months running, and prices have continued to rise over the same period. Supplier deliveries slowed by 3.8 points and seller inventories contracted by 1.7 points. In international trade, export orders fell by 0.4 points into contraction territory, 49.9%, while growth in imports slowed 2.3 points to 52.6%.

What people are saying

 “In March, U.S. manufacturing activity remained in expansion territory, growing at a slightly faster pace than the month before,” said Susan Spence, Chair of the ISM’s Business Survey Committee. “Of the five subindexes that make up the PMI, the New Orders Index indicated slower growth compared to the previous month, the Production Index grew at a faster rate, and the Employment and Inventories indexes remained in contraction. This month also marks the first report with panelists citing the Iran war as a new impact to their business, along with ongoing uncertainty with U.S. economic policy, despite the recent Supreme Court ruling striking down International Emergency Economic Powers Act (IEEPA) tariffs. In March, 64% of comments overall were negative. Among the negative comments, about 20% cited tariffs and about 40% the war in the Middle East.

“We’re seeing steady increases in activity, but geopolitical issues and the Iran war are already waning sentiment,” said an anonymous surveyed fabricated metal products executive.

“Ongoing geopolitical instability has emerged as a persistent factor influencing global trade dynamics,” reported an anonymous surveyed chemical products executive. “We anticipate strategic realignment of supply chains as organizations respond to energy market volatility and shifting trade policies. In light of these macroeconomic headwinds, we — like most organizations — are maintaining a cautious posture regarding investment commitments while continuing to monitor market conditions closely. Our purchasing strategy is being recalibrated to address supply chain vulnerabilities exposed by energy market volatility and evolving trade protectionism.”