The US Purchasing Managers Index for March was released Monday by the Institute for Supply Management (ISM), and had a score of 46.3, 1.4 percentage points lower than the 47.7 recorded in February.
The PMI also came in well below the key 50 mark that separates US manufacturing expansion from contraction, and was below 50 for the fifth consecutive month.
It is also the lowest level since May 2020, when it registered a seasonally adjusted 43.5.
Regarding the overall US economy, this score also indicates a fifth month of contraction after a 30-month period of expansion dating to 2020.
In perhaps worse economic news, the New Orders Index remained in contraction territory at a low score 44.3, 2.7 percentage points below the figure of 47.0 recorded in February, in a negative sign for future US manufacturing activity.
Other measures in the March report were also weak. For example, while the Production Index was up 0.5 percentage point to 47.8 from February’s figure of a 47.3, it still means US manufacturing output declined yet again.
The Backlog of Orders Index registered 43.9, 1.2 percentage points lower than the February reading of 45.1 and again below the key 50 mark.
The Prices Index came in at 49.2, down 2.1 percentage points compared to the February figure of 51.3, and means the costs of inputs and materials fell in the month, indicating supply chain inflation is waning.
This index (below 50 = falling prices), was just a few months ago above 80, as inflation took off.
As always, the ISM report provides a graphic of the full PMI scores for the last 12 months, which as can be seen has the measure trending down since May or 2022, and it is now averaging just 50.9 over the past year, barely above the 50 level.
US PMI Last 12 Months
Source: ISM
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Six of the US 18 industry sectors tracked by the PMI reported growth in March, up from just two in February: Printing & Related Support Activities; Miscellaneous Manufacturing; Fabricated Metal Products; Petroleum & Coal Products; Primary Metals; and Machinery.
As always, there were some interesting comments from PMI survey respondents.
Said one manager from the chemicals sector: "Sales a bit down, and budgets being cut with a greater emphasis on savings.”
Added another respondent in the machinary industry: “Lead times are still improving, but prices continue to face inflationary pressures. Prices of steel and steel products are going up some. Hydraulic components are still facing extended lead times. We are increasing inventory levels of imports due to global uncertainty from the ongoing war in Ukraine and threats from China.”
Finally, a manager in the "other" manufacturing group said that "Overall, things feel more stable in the first quarter 2023 than they did throughout 2021-22. Customer demand is — as expected — growing well, and the overall supply environment is far better than the previous two years. This is not to say there are not challenges; there absolutely are. However, there are fewer issues cropping up each week, and supply challenges are generally more like the ‘typical’ issues we experienced before the pandemic."
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