ISM Report: Manufacturing Activity Expands Following 16 Months of Contraction

With a March Purchasing Manager’s Index reading of 50.3%, manufacturing economic activity expanded for the first time since September 2022. Compared to the February reading of 47.8%, the manufacturing PMI is up 2.5 points.

“Of the six biggest manufacturing industries, four (food, beverage & tobacco products; fabricated metal products; chemical products; and transportation equipment) registered growth in March,” says Timothy Fiore, chair of the ISM’s manufacturing business survey committee.

Both the new orders index and the production index moved into expansion territory. New orders saw a 2.2 percentage point increase from February; production garnered a whopping 6.2 point increase for a March reading of 54.6%. Anything lower than 50% represents contraction.

At 47.4% the employment index is contracting at a slower rate, gaining 1.5 points from February.

“Demand remains at the early stages of recovery, with clear signs of improving conditions,” says Fiore. This outlook assessment is reflected in the comments of the survey, with a number of respondents noting strong business activity.

“Performance continues to defy projections of a downturn in activity. Demand remains strong, and the pipeline for orders is robust,” writes an executive in the chemical products sector. Another in the fabricated metal products sector reports meeting and exceeding forecasts.

Several respondents also expressed positive expectations for 2024, with a computer & electronic products executive noting high optimism that “orders are ‘just on the horizon.’”

“Many manufacturers are anticipating better business in the second quarter and much better in the third quarter,” writes a respondent in the wood products sector.