US Manufacturing Revival: Bouncing Back

US ISM Manufacturing PMI Beats Expectations

US ISM Manufacturing PMI data for the March month came at 50.3 from 47.8 in February month. Employment index higher to 47.4 from 45.9.New Orders index climbed to 51.4 from 49.2. Overall demand for business is expanded in US since September 2022. US Dollar moving positive against Rivals after the news flashed.

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In March, business activity within the US manufacturing sector showed signs of improvement, as indicated by the ISM Manufacturing Purchasing Managers’ Index (PMI), which rose to 50.3 from February’s 47.8. This figure surpassed market expectations, which had anticipated a reading of 48.4.

A closer look at the report reveals that the Employment Index increased to 47.4 from 45.9, indicating a slight uptick in employment conditions. Additionally, the New Orders Index climbed to 51.4 from 49.2, suggesting a rise in new orders, while the Prices Paid Index, reflecting inflationary pressures, rose to 55.8 from 52.5.

Interpreting the survey results, Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee, noted, “The U.S. manufacturing sector moved into expansion for the first time since September 2022. Demand was positive, output strengthened, and inputs remained accommodative.” He further commented on the Prices Index, stating, “The Prices Index moved further upward in moderate expansion (or ‘increasing’) territory as commodity-driven costs remain unstable.”

US manufacturing sector expands after 18 months

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In March, the U.S. manufacturing sector experienced growth for the first time in 1-1/2 years, according to the Institute for Supply Management (ISM). The manufacturing Purchasing Managers’ Index (PMI) rose to 50.3 last month, marking the highest reading since September 2022 and a significant increase from February’s 47.8.

This rebound follows a streak of 16 consecutive months of contraction in manufacturing, the longest stretch since August 2000 to January 2002. A PMI above 50 indicates expansion in the sector. The ISM’s previous reports had overstated manufacturing weakness, which had been constrained by higher borrowing costs.

Economists, polled by Reuters, had anticipated a PMI increase to 48.5. Despite a shift in consumer spending towards services, demand for goods remained strong. The ISM survey’s new orders sub-index rose to 51.4 in March from 49.2 in February, indicating growing demand.

Factory output also rebounded, with the production sub-index surging to 54.6 from 48.4 in the previous month. However, there were no signs of supply chain constraints from recent international shipping attacks by Yemen’s Houthi militants.

On the downside, inflationary pressures persisted, as the survey’s prices paid by manufacturers index rose to 55.8 from 52.5 in February. Despite the overall growth in the sector, factory employment continued to decline, albeit at a slower pace. The survey’s manufacturing employment index increased to 47.4 from 45.9 in February.

Overall, while the manufacturing sector showed signs of recovery, challenges such as subdued employment and inflationary pressures remain areas of concern.

US manufacturing sees first growth in 18 months

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In March, the U.S. manufacturing sector experienced growth for the first time in 1-1/2 years, marked by a notable rebound in production and an increase in new orders. However, employment within factories remained subdued, and prices for inputs rose.

According to the Institute for Supply Management (ISM), the manufacturing Purchasing Managers’ Index (PMI) rose to 50.3 last month, reaching its highest level and the first reading above 50 since September 2022, up from 47.8 in February.

This growth brought an end to a 16-month period of contraction in manufacturing, representing the longest such stretch since August 2000 to January 2002. A PMI reading above 50 indicates expansion in the manufacturing sector. Despite constraints from higher borrowing costs, manufacturing output rose at a 0.9% annualized rate in the fourth quarter, growing by 1.6% in 2023 compared to 0.8% in 2022, as per government data released on Thursday.

Economists surveyed by Reuters had expected the PMI to rise to 48.5. Although consumer spending has shifted toward services, demand for goods remains robust.

The ISM survey’s new orders sub-index, a forward-looking indicator, increased to 51.4 last month from 49.2 in February. Meanwhile, factory output rebounded, with the production sub-index surging to 54.6 from 48.4 in the prior month.

Despite concerns about supply chain disruptions caused by attacks on international shipping in the Red Sea by Yemen’s Houthi militants, the survey’s measure of supplier deliveries decreased to 49.9 from 50.1 in the previous month, indicating faster deliveries.

However, inflationary pressures persisted, with the survey’s measure of prices paid by manufacturers rising to 55.8 from 52.5 in February.

Factory employment continued to decline, albeit at a slower pace, as the survey’s measure of manufacturing employment increased to 47.4 from 45.9 in February. Nonetheless, this measure has not been an accurate predictor of manufacturing payrolls in the government’s closely watched employment report.

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