After a significant drop in February, the US manufacturing ISM picked up somewhat in March. The headline index rose from 52.4 to 53.4, reversing part of the previous month’s drop, while a more moderate increase was expected (to 53.0). The details show a more mixed picture as production (58.3 from 55.3) and employment (56.1 from 53.2) improved significantly, while only a slight increase was seen in backlog of orders (52.5 from 52.0) and inventories (50.0 from 49.5).
New orders (54.5 from 54.9), supplier deliveries (48.0 from 49.0), customer inventories (44.5 from 46.0), new export orders (54.0 from 59.5) and imports (53.5 from 54.0) deteriorated somewhat in March. Prices paid eased slightly, from 61.5 to 61.0, but remain at high levels.
We had already expected that last month’s sharp decline was partly due to seasonal adjustment factors. The rebound remains however encouraging, suggesting that the February decline was probably an exaggeration. The details remain however mixed, suggesting that the environment remains challenging in the US manufacturing sector as was also suggested by the regional business indicators.