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ISM: Manufacturing Dips, Remains In Positive Territory

Tue, 04/09/2013 - 8:00am
Jon Minnick, Associate Editor, MBT
Brad Holcomb, CPSM, CPSD, chair of the Institute for Supply Management Business Survey Committee

Although U.S. manufacturing declined in March, it continues a positive push into 2013. 

“The Institute for Supply Management (ISM) Index was 51.3 in March, down from 54.2 in February but is still above 50, the dividing point between growth and decline,” said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance for Productivity and Innovation (MAPI). “It is clear that manufacturing activity surged this winter, but now that spring has arrived, the reality that there are many headwinds this year is starting to constrain the pace of growth. Consumers faced higher payroll taxes, gasoline prices rose, and wage and salary increases barely exceed the inflation rate. Firms could pick up the pace of investment spending but the budget battles in Washington, where austerity and sequestration are the main issues, have created enough uncertainty to keep a lid on new investments.”

The PMI registered 51.3 percent, a decrease of 2.9 percentage points from February’s reading of 54.2 percent, indicating expansion in manufacturing for the fourth consecutive month, but at a slower rate. Both the New Orders and Production Indexes reflected growth in March compared to February, albeit at slower rates, registering 51.4 and 52.2 percent, respectively. The Employment Index registered 54.2, an increase of 1.6 percentage points compared to February’s reading of 52.6 percent. The Prices Index decreased 7 percentage points to 54.5, and the list of commodities up in price reflected far fewer items than in February. In addition, the Backlog of Orders, Exports and Imports Indexes all grew in March.

“The drop in the PMI expansion is a normal variation,” says Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management Business Survey Committee. “If you look at the first three months of 2013 combined, we’re on a very good track. This is perhaps a little bit of a pause. Nevertheless that 51.3 says March grew, but just not at the rates that we saw on the first two months. In addition, a lot of the supporting metrics are in positive territory. For example, exports and imports are really really strong, showing the global economy is participating in a meaningful way.”

To continue reading the full article, click here to visit our partner publication, Manufacturing Business Technology.

 

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