ISM: U.S. manufacturing contraction slows; new order index rises

Economic activity in the manufacturing sector failed to grow in March for the 14th consecutive month, and the overall economy contracted for the sixth consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The rapid decline in manufacturing appears to have moderated somewhat, as the PMI remains in the mid-30s for a third consecutive month. While the PMI is slightly higher in March, the New Orders Index offers greater encouragement, as it rose above the 40-percent mark for the first time in seven months. The Production Index showed no benefit as yet from the improvement in new orders, as it continued to decline at a rate similar to March. The rate of decline in the Employment Index slowed slightly, and the same held true for the Prices Index. A special question was asked with regard to the Economic Stimulus Package, and five of the 18 manufacturing industries expect to derive some benefit from the stimulus."

ISM's New Orders Index registered 41.2 percent in March, 8.1 percentage points higher than the 33.1 percent registered in February. This is the 16th consecutive month of contraction in the New Orders Index. A New Orders Index above 48.8 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

Six industries reported growth in new orders in March: Plastics & Rubber Products; Nonmetallic Mineral Products; Furniture & Related Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Miscellaneous Manufacturing. The industries failing to grow in March are: Petroleum & Coal Products; Apparel, Leather & Allied Products; Chemical Products; Transportation Equipment; Machinery; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Primary Metals; and Printing & Related Support Activities.

Survey respondents were asked special questions designed to learn more about expectations regarding the Economic Stimulus Package. The questions were structured to determine if respondents believe that their industry and organization will benefit from the program as they understand it.

Of all respondents, 36 percent indicate that their industrywill benefit. The industries with a majority of respondents indicating that they expect to benefit are: Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Nonmetallic Mineral Products; Primary Metals; and Machinery.

Thirty-four percent of respondents indicate that their companywill benefit from the stimulus package. The industries with a majority of respondents indicating that their company will benefit are: Electrical Equipment, Appliances & Components; Machinery; and Nonmetallic Mineral Products.

The full report can be found here.