March U.S. Manufacturing PMI Dips to Lowest Since June 2017

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The seasonally adjusted Backlogs of Work Index dipped below the neutral 50.0 mark for the first time since July 2017 in March, to signal a fractional decline in outstanding work. A slower rise in new orders reportedly allowed firms to catch up and process shipments in a timely manner. Company size data indicated that outstanding business fell at small firms, but rose at medium and large-sized companies.

Stocks of Finished Goods

Stocks of finished goods at U.S goods producers increased in March, following a three month sequence of decline. Though marginal, the rise was marginal but the fastest since October 2017 amid a slower upturn in new business and efforts to build stocks in anticipation of a pick up in demand.

Employment

Manufacturing firms continued to register a solid rise in employment in March, with the pace of job creation matching that seen in February. The increase in workforce numbers was broadly in line with the series trend and was linked to a sustained upturn in client demand. Nonetheless, firms mentioned ongoing problems finding skilled workers to fill vacancies.

Output Prices

Average factory gate charges continued to rise, thereby extending the current sequence of inflation that began in October 2016. The solid increase in output prices was faster than the series trend and was attributed to greater cost burdens. Nonetheless, the rate of inflation was the least marked since December 2017.

Input Prices

March data signalled a further rise in average cost burdens at goods producers. Some panellists commented that higher input prices were due to the ongoing impact of tariffs and greater supplier costs following strong demand for inputs. That said, the rate of inflation eased for the fifth month running and was the softest since August 2017, with around 80% of survey respondents reporting no change in input costs.

Suppliers’ Delivery Times

Manufacturing firms continued to register a deterioration in vendor performance in March. Delivery times lengthened solidly, albeit to the smallest degree since November 2017. Where delays were noted, panellists cited capacity shortages at suppliers and increased demand for inputs.Quantity of Purchases

Buying activity across the U.S manufacturing sector rose in March, as has been the case each month since May 2016. The increase in input purchasing was attributed to the replenishment of inventories and greater production requirements. That said, the upturn was the weakest since June 2016 and only marginal overall.

Stocks of Purchases

The rate of growth in pre-production inventories picked up from February's recent low and was modest overall. March data signalled the twenty-second successive monthly increase in stock levels, with firms attributing the rise to inventory building and a further rise in client demand.

Future Output

Business confidence picked up in March to signal a solid degree of optimism among manufacturers regarding output over the coming 12 months. More positive expectations reportedly stemmed from new product development, predictions of a rise in government spending, and efforts to increase productivity.

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