NEW YORK - The overall economy grew for the eleventh straight time after seven months of contraction, while the manufacturing sector expanded for the eighth time after eighteenth months of contraction, the Institute for Supply Management reported this morning.
According to the ISM’s monthly report on business, the ISM index jumped to 59.6 in March from 56.5 in February.
Economists polled by Thomson Reuters predicted the index would rise to 56.8.
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 manufacturing sector grew for the eighth consecutive month during March," said Norbert J. Ore, chair of the Institute of Supply Management's manufacturing business survey committee. “The rate of growth as indicated by the PMI is the fastest since July 2004. Both new orders and production rose above 60 percent this month, closing the first quarter with significant momentum going forward. Although the Employment Index decreased 1 percentage point to 55.1 percent from February’s reading of 56.1 percent, signs for employment in the sector continue to improve as the index registered a 10 percent month-over-month improvement, indicating that manufacturers are continuing to fill vacancies. The Inventories Index provided a surprise as it indicated growth for the first time following 46 months of liquidation — perhaps signaling manufacturers’ willingness to increase inventories based on expected levels of activity.”
The closely watched prices paid index grew to 75.0 from 67.0. The employment index was at 55.1, down from 56.1 the prior month.
The production index increased to 61.1 from 58.4, the new orders index rose to 61.5 from 59.5; the supplier deliveries index climbed to 64.9 from 61.1; the export orders index increased to 61.5 from 56.5; and the imports index rose to 57.0 from 56.0.
The inventories index increased to 55.3 from 47.3; the customers’ inventories index rose to 39.0 from 37.0; and backlog of orders fell to 58.0 from 61.0.
Respondents’ comments included:
“Certain markets served have increased by 50 percent in new customer orders, while other markets are not as strong.” (Miscellaneous Manufacturing)
“Business levels continue to be strong coming out of the Chinese New Year. First quarter will be our best since 2000.” (Machinery)
“Business is steady and prospects are good for Q2.” (Food, Beverage & Tobacco Products)
“After-market sales are improving as more vehicles require maintenance.” (Transportation Equipment)
“There is a serious shortage of basic electronic components, and lead times are becoming a problem. We are also seeing dramatic price increases.” (Computer & Electronic Products)
