Manufacturing shrugs off issues as PMI climbs to 55.3%

Purchasing manufacturers' index (PMI) bolstered by strong employment, orders, production.
By Bob Vavra April 1, 2019
The March purchasing manufacturers' index (PMI) rose 1.1 percentage points to 55.3 percent as employment, new orders, and production all showed growth. Courtesy: Bob Vavra, CFE Media

Manufacturing’s continued growth popped back over the 10% growth rate in March, according to the latest data from the Institute for Supply Management (ISM). The March purchasing manufacturers’ index (PMI) rose 1.1 percentage points to 55.3 percent as employment, new orders, and production all showed growth.

“Timothy Fiore, chairman of the ISM’s Manufacturing Business Survey Committee, said the March numbers could have been even better. “Consumption (production and employment) continued to expand and regained its footing with a combined 6.2-percentage point gain from the previous month’s levels, recovering most of February’s loss,” Fiore said in a press release. “Inputs — expressed as supplier deliveries, inventories and imports — were lower this month, primarily due to inventory consumption exceeding inputs, resulting in a combined 2.3-point decline in the Supplier Deliveries and Inventories indexes that contributed negatively to the PMI.”

Committee members remain generally optimistic and seem to have baked crises such as Brexit and tariffs into their expectations for the manufacturing section. Among the comments:

  • “Customer orders remain strong.” (Textile mills)
  • “The electronics industry seems to be slowly coming out of crisis mode. Lead times and costs have leveled out in some commodities, and dynamic random access memory (DRAM) prices are actually coming down.” (Computer & electronic products)
  • “Brexit continues to be a concern, despite the fact that our organization has already rolled out a plan to minimize its impact.” (Chemical products)
  • “Business remains very strong amid rumors of a slowdown, but forecasts do not indicate this. Electronics are at tight capacity from manufacturers, with no [change] in the near future.” (Transportation equipment)
  • “Strong customer orders continue.” (Food, beverage & tobacco products)
  • “Current weather conditions causing significant delivery delays [and] diminishing our production capabilities.” (Machinery)
  • “Strong business momentum coming into January and early February has slowed to typical seasonal business conditions for our industry.” (Miscellaneous manufacturing)
  • “General procurement levels remain strong based on demand. Backlog for domestic new and repaired equipment continues to grow. Production meeting customer delivery requirements is a challenge. Still experiencing a skills gap in hiring qualified shop personnel, machinists and mechanics.” (Fabricated metal products)
  • “Steel tariffs continue to put upward pressure on our input costs. The government shutdown delayed the process of gaining exemptions to the tariffs.” (Petroleum & coal products)
  • “Awaiting with anticipation the outcome of the U.S.-China trade deal.” (Plastics and rubber products)
  • “Experienced a reduction in orders, with forecasted softness going into Q2.” (Primary metals)
  • “Skilled labor is still tough to find.” (Apparel, leather & allied products)
  • “Steel in U.S. remains strong, driving numerous product lines.” (Nonmetallic mineral products)
  • “Business is very strong and has been for over two years.” (Furniture & related products)

Exports remain a lingering concern for manufacturers. “Exports orders continue to expand, but at marginal levels,” Fiore said. “Prices reversed two months of contraction by returning to a robust mid-50s level. The manufacturing sector continues to expand, demonstrated by improvements in the PMI three-month rolling average, which is consistent with overall manufacturing growth projections.”

Next month will mark 10 years of economy growth based on the PMI; manufacturing remains well above the 50% growth level for the 32nd straight month.

Bob Vavra
Author Bio: Bob is the Content Manager for Plant Engineering.