March 2020 Manufacturing ISM Report On Business Indicates Manufacturing Contracted

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected.  Economic activity in the manufacturing sector contracted in March, and the overall economy grew for the 131st consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

Manufacturing contracted in March, as the PMI registered 49.1 percent, a 1-percentage point decrease from the February reading of 50.1 percent.  This was a contraction after expanding marginally in January and February.

ISM’s New Orders Index registered 42.2 percent in March, a decrease of 7.6 percentage points compared to the 49.8 percent reported for February.  This indicates that new orders contracted for the second consecutive month.  This is the index’s lowest reading since March 2009, when it registered 41.3 percent.

ISM’s Production Index registered 47.7 percent in March, 2.6 percentage points lower than the 50.3 percent reported for February, indicating a return to contraction following two months of expansion.

ISM’s Employment Index registered 43.8 percent in March, a decrease of 3.1 percentage points compared to the February reading of 46.9 percent.  This is the lowest reading since May 2009, when the index registered 35.3 percent and the eighth month of employment contraction, and at a faster rate compared to February.

The delivery performance of suppliers to manufacturing organizations was slower in March, as the Supplier Deliveries Index registered 65 percent. This is 7.7 percentage points higher than the 57.3 percent reported for February, as suppliers continue to struggle to deliver, at a much stronger rate compared to February.

The Inventories Index registered 46.9 percent in March, a 0.4-percentage point increase from the 46.5 percent reported for February.  The index contracted for a 10th straight month, but at a slower rate.

ISM’s Backlog of Orders Index registered 45.9 percent in March, 4.4 percentage points lower than the 50.3 percent reported in February, indicating order backlogs contracted after expanding for one month.

Of the 18 manufacturing industries, the 10 that reported growth in March — listed in order — are: Printing & Related Support Activities; Food, Beverage & Tobacco Products; Apparel, Leather & Allied Products; Wood Products; Paper Products; Chemical Products; Computer & Electronic Products; Primary Metals; Miscellaneous Manufacturing; and Plastics & Rubber Products.  The six industries reporting contraction in March, in order, are: Petroleum & Coal Products; Textile Mills; Transportation Equipment; Furniture & Related Products; Fabricated Metal Products; and Machinery.