Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  The ISM Manufacturing Index Declined to 57.1 in March
Posted Under: Data Watch • Employment • Inflation • ISM • COVID-19

 
Implications:  The manufacturing sector continued to expand in March, though at a slightly slower pace, with fifteen of eighteen industries reporting growth.  The two most forward-looking indices, new orders and production, led the overall index lower in March.  In fact, new orders posted the largest monthly decline since the early days of the COVID pandemic, most likely a result of short-term customer uncertainty in the immediate aftermath of the Russian invasion of Ukraine. That said, that index is still north of 50, signaling growth, and respondent comments in March highlighted strong ongoing demand from customers while also reiterating supply-chain problems related to shortages of key inputs and transportation services.  These issues have all come together to keep manufacturing activity from rising quickly enough to meet an explosion of demand.  However, there has been recent progress on several fronts.  For example, the supplier deliveries index fell for the fourth time in five months and is well below its recent high back in May 2021, signaling that supply-chain issues are easing.  However, delays are far from over, with fifteen of eighteen industries reporting waiting longer for inputs.  This, in turn, has resulted in long lead times for the clients of US factories, who continued to see their inventories shrink in March. The good news is that the rate at which those inventories are shrinking has been slowing consistently.  There was also improvement on the labor front, with the employment index rising to 56.3, just below the post-pandemic high of 57.7 set in March of 2021.  It looks like the manufacturing sector, which is one of the worst-hit sectors in the ongoing labor shortage, has begun to see some progress on filling positions.  Job openings are now down over 100,000 from the peak, but are still twice what they were pre-pandemic, signaling the sector still has a way to go.  Finally, the highest reading of any index in March continued to come from prices, which posted its largest monthly gain in over a year, surging to 87.1 in March from 75.6 in February.  It looks like the invasion of Ukraine temporarily boosted inflationary pressure over and above pre-existing inflation related to an overly expansionary Federal Reserve.  Inflation this year will ultimately moderate from the pace we saw last year, but not just yet.  In other news this morning, construction spending rose 0.5% in February (+1.6% including revisions to prior months), with large increases in home building and power projects more than offsetting declines in commercial construction and roads.

Click here for a PDF version
Posted on Friday, April 1, 2022 @ 11:47 AM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2022 All rights reserved.