Like spring, manufacturing coming back slowly

March ISM good not great

ISM Manufacturing Report

The March headline reading of 53.7 was a marginal yet welcome improvement on the February level of 53.2. Anecdotal evidence from respondents appear to confirm the majority hope that the spring season will fight back against the cruel blows delivered by winter.

One respondent from the food, beverage and tobacco sector noted, "Weather has created major delays on inbound materials and outbound sales. We need spring." Within the chemicals industry one company noted that export orders were picking up supported by rising volume, while the domestic market was holding up in the face of earlier predicted declines. Paper products noted improvement in the overall economy and strong bookings in residential contractor and home repair work. Fabricated metals businesses noted a still strong business climate in the first quarter.

Overall, the responses from a broad swath of industries appear to offer a positive outlook. New orders grew faster while the production index flipped from contraction (48.2) to growth at 55.9. Both export and import index values indicated strengthening demand. The dip in the employment gauge to 51.1 from 52.3 was unwelcome although still representative of a strengthening labor market. The index for customer inventories slipped to 42.0 and was described as “too low” by the ISM, which seems consistent with managers’ feedback suggesting the “economy is looking positive” (machinery) and that “business continues to improve” (furniture).

About the Author
Andrew Wilkinson

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.

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