Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  The ISM Manufacturing Index Rose to 50.3 in March
Posted Under: Data Watch • Employment • Government • Inflation • ISM • Markets • Fed Reserve
Supporting Image for Blog Post


Implications:  The ISM Manufacturing Index showed some signs of life in March, rising to 50.3, and beating even the most optimistic forecast from any economics group surveyed by Bloomberg.  The reading above 50 signals that activity in the US manufacturing sector expanded in March (albeit barely), snapping sixteen consecutive months of contraction.  Looking at the details of the report, half of the eighteen major manufacturing industries reported growth in March, with six reporting contraction, and three reporting no change.  Both demand and production were responsible for the rise in the overall index, as the index for production jumped to 54.6 from 48.4, while the new orders index broke back into expansion territory for only the second time in the last nineteen months.  Survey comments described continued demand softness, but optimism that order activity will pick up in the second quarter.  Despite this optimism, demand remains soft in the manufacturing sector.  When looking at the big picture, goods-related activity was artificially boosted during the COVID lockdowns, but then the economy reopened, and consumers began shifting their spending preferences back to a more normal mix, away from goods and back to services. The ISM index peaked in March 2021 (the last month federal stimulus checks were sent out) and has been weaker ever since.  We continue to believe a recession is coming this year and the manufacturing sector is likely to lead the way.  Case in point, hiring activity in the manufacturing sector contracted for the sixth consecutive month as companies continued reducing headcounts in March with significant layoff activity. We believe investors should remain cautious as the monetary and fiscal stimulus during COVID wears off.  Last but not least, the highest reading of any category in the report came from the prices index, which increased to 55.8 in March.  After sitting in contraction territory for most of 2023, the prices index has been above 50 each month in 2024, signaling higher prices.  This is not a good sign for the Fed, as the goods sector has been a key driver for lower inflation readings over the last year.  In other news this morning, construction spending declined 0.3% in February, as a sizeable increase in homebuilding was not enough to offset broad declines across most other major construction categories.

Click here for a PDF version

Posted on Monday, April 1, 2024 @ 12:46 PM • Post Link 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.
Follow First Trust:  
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 © 2024 All rights reserved.