Contraction in the U.S. manufacturing economy deepened in March, the Institute for Supply Management said today.
The Tempe, Ariz.-based group’s manufacturing index, known as the PMI, fell to 46.3% in March. That was down from 47.7% in February.
A PMI below 50% indicates economic contraction. The March index was the fifth consecutive month in negative territory. The PMI is considered a leading economic indicator, a barometer of where manufacturing is heading.
March’s PMI was the lowest in the past 12 months. The index has averaged 50.9% during that period.
“There are indications of demand continuing to soften,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, said on a conference call.
The PMI is based on a survey of executives in 18 industries. Six industries indicated economic expansion last month, including miscellaneous manufacturing, fabricated metal products, primary metals, and machinery. Twelve industries reported economic contraction, including transportation equipment.
In late 2022, ISM forecast the first half of this year would be slow economically, with a rebound in the second half.
Fiore said today the rebound may be delayed.
“We thought half one would be lumpy and this may be part of the lump,” Fiore said.
Now, he added, “We’re looking at a recovery sometime around” the year’s fourth quarter.
ISM’s New Orders Index registered at 44.3% in March, down from 47% the month before. Five industries reported a gain in new orders, with 11 reporting a decline. New orders are a key measurement and show up in later months in production.
The group’s Production Index improved to 47.8% last month from 47.3% in February. Eight industries reported output gains while eight reported declines in production.
ISM’s Employment Index slipped to 46.9% in March from 49.1% in February. Six industries reported job gains, with six reporting job cuts.
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