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First Cut: ISM Manufacturing Index in line with continued moderate expansion in March

The ISM Manufacturing Index turned in a reading of 55.3 in March after 54.2 in February. The index level remains in line with recent months and points to continued healthy expansion for the factory sector. Survey respondents’ comments suggest that orders and production are solid and expected to remain so. There were some concerns expressed about trade and tariff policy, but less than has been the case. Disruptions for the steel sector appear to have largely settled, although it is now electronics are causing difficulties. Shortages of skilled workers were also mentioned. If activity has slowed from the heated pace of 2017 and 2018, it is not provoking much immediate pessimism about the outlook.

The index components were stronger for new orders, production, and employment — all harbingers of continued expansion. In some instances respondents’ commented noted that the weather had an impact on delivery times. This component was down somewhat from the prior month. Inventories were also down, but not significantly.

The index for prices paid was up to 54.3 in March, probably due to increases in energy costs.

Export orders remained about on trend, but were a trifle lower in March at 51.7 after 52.8 in February. Imports were down to 51.1, the lowest since 49.2 in January 2017. This may reflect reluctance to bring in goods before it was known whether tariffs were going to increase for the month or not.

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