A report from
the Institute for Supply Management (ISM) revealed on Tuesday that the U.S.
manufacturing sector’s activity contracted in March for the first in three months.
The ISM's index
of manufacturing activity - the manufacturing PMI - checked in at 49.0 per cent
in March, down 1.3 percentage points from an unrevised February reading of 50.3 per cent. The latest reading indicated
that the U.S. factory sector slipped into contraction after two consecutive
months of expansion.
Economists had expected
the indicator to drop to 49.5 per cent.
According to
the report, the New Orders Index declined 3.4 percentage points to 45.2 per
cent last month, hitting the lowest level since May 2023 (42.9 per cent). The Production Index dropped 2.4 percentage points
to 48.3 per cent, slipping back into contraction territory after two straight
months of growth. In addition, the Employment Index fell 2.9 percentage points
to 44.7 per cent, indicating that employment reduced for the second month in a
row. Meanwhile,
the Inventories Index climbed 3.5 percentage points to 53.4 per cent, reaching its highest level since October 2022. On the price front, the Prices Index jumped 7.0 percentage
points to 69.4 per cent, indicating raw materials prices rose for the sixth
straight month after a decrease in September 2024.
Commenting on
the March data, Timothy R. Fiore, Chair of the ISM Manufacturing Business
Survey Committee, noted that demand and production retreated and destaffing
continued as panelists' companies responded to demand confusion. “Prices growth
accelerated due to tariffs, causing new order placement backlogs, supplier
delivery slowdowns and manufacturing inventory growth,” he added.