The manufacturing economy’s expansion softened slightly in March following Russia’s invasion of Ukraine.
The Institute for Supply Management said its manufacturing index, known as the PMI, slipped to 57.1 percent in March. That was down from 58.6 percent in February.
Despite the softening, the index still indicated that manufacturing was running at a strong rate. A PMI level above 50 percent indicates an expanding manufacturing economy. Below 50 percent indicates economic contraction.
The March index was dragged down by a decline in new orders. That slide reflected economic uncertainty from the late February Russian attack on Ukraine. Energy prices soared as a result. In the U.S., the average price of gasoline surpassed $4 a gallon, a level not seen since 2008.
Tempe, Ariz.-based ISM said today that the March PMI reflected expansion despite energy price increases and general uncertainty stemming from the Russian invasion.
“The manufacturing economy continues to improve,” Tim Fiore, chair of ISM’s Manufacturing Business Survey Committee, said on a conference call. “What remains is a demand-driven expansion.”
The PMI is based on a survey of supply executives in 18 industries. The index is considered a leading economic indicator and a barometer of where manufacturing is headed.
ISM said 15 of 18 industries reported economic expansion, including miscellaneous manufacturing, machinery, transportation equipment, and fabricated metal products. Only two industries, wood products and coal & petroleum products, reported economic contraction.
The PMI has averaged 59.7 percent the past 12 months. The 57.1 percent PMI for March was the lowest for the past 12 months. The index has remained in positive territory for 22 consecutive months.
The group’s New Orders Index plunged to 53.8 percent in March from 61.7 percent in February. The new orders category is considered important because orders affect production later. Thirteen of the 18 industries reported a gain in new orders.
ISM’s Production Index slipped to 54.5 percent last month from 58.5 percent in February. Eleven of 18 industries reported a gain in output.
The institute’s Employment Index rose to 56.3 percent from 52.9 percent in February. Ten industries reported employment gains.
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