ISM Manufacturing Index Expands for First Time in 17 Months

The Institute for Supply Management (ISM) manufacturing purchasing managers index (PMI) rose to 50.3 in March from 47.8 in February. The latest figure marks the first month the index has expanded in 17 months. The March reading was above the forecast of 49.8.

Here is an excerpt from the latest report:

Fiore continues, “The U.S. manufacturing sector moved into expansion for the first time since September 2022. Demand was positive, output strengthened and inputs remained accommodative. Demand improvement was reflected by the (1) New Orders Index back in expansion and fewer comments regarding ‘softening,’ (2) New Export Orders Index expanding again, supported by panelists’ stronger optimism (3) Backlog of Orders Index remaining in moderate contraction territory, the same as in February and (4) Customers’ Inventories Index contracting for the fourth consecutive month, remaining at a level accommodative for future production. Output (measured by the Production and Employment indexes) surged, with a combined 7.7-percentage point upward impact on the Manufacturing PMI® calculation. Panelists’ companies notably increased their production levels month over month. Head-count reductions continued in March, with sizable layoff activity reported. Inputs — defined as supplier deliveries, inventories, prices and imports — continued to accommodate future demand growth and showed signs of stiffening. The Supplier Deliveries Index dropped marginally, moving into ‘faster’ territory, and the Inventories Index improved but remained in slight contraction territory. The Prices Index moved further upward in moderate expansion (or ‘increasing’) territory as commodity driven costs remain unstable.