March Manufacturing ISM Report on Business; PMI at 55.3%

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Manufacturing expanded in March, as the PMI registered 55.3%, an increase of 1.1 percentage points from the February reading of 54.2%. "This indicates growth in manufacturing for the 31st consecutive month. The PMI reversed a February expansion decline primarily through improved growth in employment and, to a lesser extent, new orders," says Fiore. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.

A PMI above 42.9%, over a period of time, generally indicates an expansion of the overall economy. Therefore, the March PMI indicates growth for the 119th consecutive month in the overall economy and the 31st straight month of growth in the manufacturing sector. "The past relationship between the PMI® and the overall economy indicates that the PMI for March (55.3%) corresponds to a 3.7-percent increase in real gross domestic product (GDP) on an annualized basis," says Fiore.

New Orders

ISM's New Orders Index registered 57.4% in March, which is an increase of 1.9%age points when compared to the 55.5% reported for February, indicating growth in new orders for the 39th consecutive month. "Customer demand expansion improved compared to February, with all six of the top six industry sectors expanding," says Fiore. A New Orders Index above 52.5%, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

Production

ISM's Production Index registered 55.8% in March, which is an increase of 1%age point when compared to the 54.8% reported for February, indicating growth in production for the 31st consecutive month. "Production expansion continued in March, at a faster pace compared to February. Production output was able to improve customer-inventory positions and reduce growth in backlog orders. Many respondents noted that weather conditions continue to have a negative impact on factory output," says Fiore. An index above 51.7%, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

Employment

ISM's Employment Index registered 57.5% in March, an increase of 5.2 percentage points when compared to the February reading of 52.3%. This indicates growth in employment in March for the 30th consecutive month. "Employment continued to expand, improving on February's performance and achieving its highest expansion level since November 2018, when the index registered 57.7%," says Fiore. An Employment Index above 50.8%, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.