Manufacturing accelerated in March to its highest level in almost 40 years, the Institute for Supply Management said today.
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.
“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 institute said new orders, production and employment all contributed to the strong PMI for March. Economic expansion “is broad-based,” Fiore said.
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.
Manufacturers surveyed by the institute indicated that many are affected by a shortage of skilled workers, Fiore said.
“There’s a lot of absenteeism, a lot of turnover,” he said.