U.S. manufacturing contracted in March as the novel coronavirus (COVID-19) slammed the economy, the Institute for Supply Management said today in a monthly report.
The Tempe, Ariz.-based group’s manufacturing index, known as the PMI, registered at 49.1 percent. That was down from 50.1 percent in February. The March PMI snapped a two-month streak of slow manufacturing growth.
What’s more, conditions worsened as March wore on.
“Definitely as the month closed, things got worse,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, said on a conference call with reporters. “This happened so quickly…you almost want a PMI weekly.”
The index is based on a survey of 350 purchasing and supply executives across 18 industries In March, 80 percent of comments from respondents referenced COVID-19 as a top concern, Fiore said.
The PMI is considered a leading economic indicator and a barometer of where the economy is heading. A PMI reading above 50 percent indicates economic expansion while below 50 percent reflects contraction.
The PMI has averaged 50 percent even the past 12 months. The index has shown economic contraction for six of the past eight months.
In March, 10 industries reported growth, led by food, beverage and tobacco products. Six industries reported contraction including transportation equipment, fabricated metal products and machinery.
New orders, production and employment all contracted last month. Fiore said there were no signs of immediate improvement. Factories in some industries, including transportation, have been shut down in an effort to prevent the contagious virus from spreading.
“I would not expect April to be better than March,” he said. “With more and more people staying home, it’s difficult to run factories.”
The group’s New Orders Index plunged to 42.2 percent for March, down from 49.8 percent the month before. Nine of 18 industries said orders increased while the other nine reported declines.
ISM’s Production Index slipped to 47.7 percent last month from 50.3 percent in February. Seven industries said output rose while five said production fell.
The institute’s Employment Index declined to 43.8 percent in March, down from 46.9 percent the month before. Three industries reported job gains while 13 reported job cuts.