Manufacturing expansion eased in March but was still widespread and running at strong levels, the Institute for Supply Management (Tempe, AZ) said today.
The group’s manufacturing index, known as the PMI, was 59.3% in March, down from 60.8% the month before, the group said in a monthly report. The February PMI was the highest index reading since May 2004.
“The pace remains strong,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, said on a conference call. “Overall demand remains very strong and very healthy.”
ISM said 17 of 18 industries showed economic expansion. They included fabricated metal products, transportation equipment, petroleum and coal products, machinery, miscellaneous manufacturing and primary metals. Only apparel reported economic contraction.
At the same time, purchasing and supply executives who participated in an ISM survey expressed concern about new steel and aluminum tariffs. The Trump administration last month implemented a 25% tariff on imported steel and 10% on aluminum. Among the countries affected by the tariffs are China, Russia and Taiwan.
Fiore said almost one-third of comments from respondents referenced tariffs.
“There’s a lot of general concern,” Fiore said. “A lot of our clients are already seeing” higher steel and aluminum prices, he said.
‘Supply and Demand’
“Today you’re seeing the market reacting to Washington’s tariff news,” said Steve Rosen, co-CEO of Resilience Capital Partners (Cleveland), a private equity firm which owns manufacturing businesses. “You’re seeing prices rise on expectations.” However, he said price increases also reflected strong business conditions.
“It’s not just tariffs, it’s supply and demand,” Rosen said. “I’m still cautiously optimistic.”
The ISM report is based on a survey of 350 purchasing and supply executives. A reading above 50% indicates economic expansion and below 50% indicates contraction. The PMI has averaged 58.2% the past 12 months. The PMI has been above 50% for 19 consecutive months.
ISM’s New Orders Index cooled to 61.9% in March from 64.2% the month before. The institute said 15 of 18 industries reported an increase in new orders. Only apparel reported a decline in orders.
The group’s Production Index registered at 61% last month, down from 62% in February. Fourteen industries reported gains in output. Only apparel and textiles reported declines in production.
ISM’s Employment Index cooled to 57.3% last month from 59.7% the month before. Twelve industries reported job gains. Only one industry, food, beverage and tobacco products, reported a decrease in employment.