Manufacturing Index Accelerates to Four-Decade High

Economic activity in the manufacturing sector grew in March, with the overall economy notching a 10th consecutive month of growth, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

New Orders, Production & Employment Growing

The Tempe, Ariz.-based group’s manufacturing index, known as the PMI, reached 64.7 percent. That was up from 60.8 percent in February. The March index was the highest since the PMI registered at 66 percent in November 1983.

  • *The March Manufacturing PMI® registered 64.7 percent, an increase of 3.9 percentage points from the February reading of 60.8 percent. This figure indicates expansion in the overall economy for the 10th month in a row after contraction in April.
  • *The New Orders Index registered 68 percent, up 3.2 percentage points from the February reading of 64.8 percent.
  • *The Production Index registered 68.1 percent, an increase of 4.9 percentage points compared to the February reading of 63.2 percent.
  • *The Backlog of Orders Index registered 67.5 percent, 3.5 percentage points above the February reading of 64 percent. The Employment Index registered 59.6 percent, 5.2 percentage points higher than the February reading of 54.4 percent.
  • *The Supplier Deliveries Index registered 76.6 percent, up 4.6 percentage points from the February figure of 72 percent.
  • *The Inventories Index registered 50.8 percent, 1.1 percentage points higher than the February reading of 49.7 percent.
  • *The Prices Index registered 85.6 percent, down 0.4 percentage point compared to the February reading of 86 percent.
  • *The New Export Orders Index registered 54.5 percent, a decrease of 2.7 percentage points compared to the February reading of 57.2 percent.
  • *The Imports Index registered 56.7 percent, a 0.6-percentage point increase from the February reading of 56.1 percent.

Manufacturing performed well for the 10th straight month, with demand, consumption and inputs registering strong growth compared to February. Labor-market difficulties at panelists’ companies and their suppliers persist. End-user lead times (for refilling customers’ inventories) are extending due to very high demand and output restrictions as supply chains continue to recover from COVID-19 impacts

“This is a strong growth cycle for sure,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, said on a conference call.

The index is considered a leading economic indicator and a barometer of where the economy is heading. The PMI is based on a survey of supply executives across 18 industries.

Seventeen industries reported economic growth last month, including textiles, machinery, fabricated metal products, transportation equipment and miscellaneous manufacturing. No industries reported economic contraction.

An index reading above 50 percent indicates economic expansion while below 50 percent indicates contraction. The PMI has been in positive territory for 10 months. The index has averaged 55.3 percent for the past 12 months.

The group’s New Orders index reached 68 percent last month, up from 64.8 percent in February. ISM said 15 industries reported an increase in orders. The only industry indicating a decline in orders was wood products.

The Production Index increased to 68.1 percent in March, up from 63.2 percent the month before. Fourteen industries reported gains in output, with no industry saying it had a production decline.

The Employment Index rose to 59.6 percent for March, up from 54.4 percent in February. Fourteen industries reported job increases.