United States: Manufacturing edges down in March but shows no signs of waning momentum
April 3, 2017
The ISM manufacturing index eased slightly in March, weighed down by slowing output. The indicator dipped to 57.2 from 57.7 in February but managed to beat market expectations of a steeper fall to 57.1. Despite the result, the ISM index still sits comfortably above the 50-threshold that separates an expansion from a contraction in the U.S. manufacturing economy, where it has been since September of last year.
The underlying details of March’s reading are broadly positive. Staffing levels rose at the fastest pace in six years as the labor market continued to tighten. New export orders also accelerated notably in March, puzzling analysts who had expected the strength of the dollar to weigh on foreign demand. Inventories also decreased substantially while suppliers’ delivery times rose, suggesting that operating conditions are not only being fueled by upbeat sentiment but by increased demand. The headline figure was largely dragged down by decelerating growth in production and new orders. Both of these, however, are well above the breakeven point of 50, with the latter still logging the second best result since December 2013. An overwhelming majority of U.S. industries surveyed by ISM reported growth in March, while some commented that higher input prices were successfully passed onto consumers.
Author: David Ampudia, Economist