The overall economy grew for the 107th straight time, the Institute for Supply Management reported Monday.

According to the ISM's monthly report on business, the ISM index decreased to 59.3 in March from 60.8 in February.

Economists polled by IFR Markets predicted the index would be 60.0.

An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion. A reading of 50 shows the sector was unchanged in the month.

The prices paid index increased to 78.1 from 74.2. The employment index fell to 57.3 from 59.7.

The production index slipped to 61.0 from 62.0, the new orders index declined to 61.9 from 64.2; the supplier deliveries index declined to 60.6 from 61.1; the export orders index slid to 58.7 from 62.8; and the imports index dipped to 59.7 from 60.5.

The inventories index fell to 55.5 from 56.7; the customers' inventories index decreased to 42.0 from 43.7; and backlog of orders remained at 59.8.

Respondents' comments included:

  • “Supply constraints, extended lead times, capacity constraints [and the like], particularly in the electronics components markets, continue to frustrate and drain needed resources, have delayed production schedules and, in some cases, caused missed or delayed sales opportunities.” (Computer & Electronic Products)
  • “International demand is strong for our products in all regions. We are seeing constraints in multiple chemical supply chains due to increased global demand. We are concerned about the impact of tariff and trade wars on demand, but at this time, [there are] no signals that global demand is slowing.” (Chemical Products)
  • “Production targets continue to be a struggle due to shortages of globally sourced components. Many subtier components are in short supply for multiple OEMs.” (Transportation Equipment)
  • “In the U.S., we continue to struggle with finding carriers and drivers for shipments.” (Food, Beverage & Tobacco Products)
  • “Much concern in the industry regarding the steel and aluminum tariffs recently [imposed]. This is causing panic buying, driving the near-term prices higher and [leading to] inventory shortages for non-contract customers.” (Machinery)
  • “New tariffs are causing concern across the supply chain. Full impact will take a few weeks to reveal itself.” (Miscellaneous Manufacturing)
  • “Significant price increases in the steel commodity due to 232 [the tariffs]. The price increases will begin to impact our company’s performance.” (Primary Metals)
  • “Overall, incoming orders are picking up, and supplier pricing is increasing in some commodities.” (Textile Mills)
  • “Hiring continues to slowly increase from February into March and capital spending was allowed a small increase. Oil market conditions have improved and continue to stabilize.” (Petroleum & Coal Products)

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Gary Siegel

Gary Siegel

Gary Siegel has been at The Bond Buyer since 1989, currently covering economic indicators and the Federal Reserve system.