Manufacturing strengthened in March, helped by gains in new orders, production and employment, the Institute for Supply Management said today.
The Tempe, Ariz.-based group’s manufacturing index, known as the PMI, improved to 55.3 percent, according to a monthly report. That was up from 54.2 percent in February. March also had the second-best PMI in the past four months.
“Overall, it’s a good month,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, said on a conference call. “We’re running at a pretty decent clip here.”
The PMI is considered a leading indicator, meaning it’s a sign of what may be ahead in the economy. The ISM report is based on a survey of 350 purchasing and supply executives. A reading above 50 percent indicates a growing manufacturing economy. Below 50 percent indicates economic contraction.
March was the 31st straight month with a PMI above 50 percent. However, it was below the 12-month average of 57.7 percent. During that period, the PMI peaked at 60.8 percent in August.
In March, 16 of 18 industries reported economic expansion, including printing, textiles, petroleum and coal products, transportation equipment, fabricated metal products and machinery. Only apparel and paper products reported economic contraction.
ISM said its New Orders Index improved to 57.4 percent in March from 55.5 percent the month before. Fourteen of 18 industries said orders increased.
The group’s Production Index rose to 55.8 percent from 54.8 percent in February. Nine industries reported output gains while four indicated declines in production.
The Employment Index surged to 57.5 percent last month from 52.3 percent in February. Thirteen industries reported job gains. Four reported cuts in jobs, including fabricated metal products and machinery.
Fiore said he expects “a steady 54-to-56 (percent) number” for the year’s second quarter, which begins today and runs through June 30.
“I think we’re continuing in a steady state,” he said. “I think the U.S. is in good shape, especially if we can resolve” trade disputes.
The U.S. and China are negotiating trade disagreements, seeking to end a trade war. There are also trade tensions between the U.S. and other Asian nations as well as the European Union.