US Manufacturing Stays Even Stronger Than China’s Gains for March

April 1, 2019 by Jon C. Ogg

The financial markets were cheering news that China’s manufacturing report in March had shown an unexpected recovery and expansion, along with higher employment conditions there adding a further a boost. Now a fresh read indicates that the United States is holding up even better than China. The Manufacturing ISM Report On Business figure rose to 55.3% in March from a 54.2 reading in February.

The Wall Street Journal had a consensus economist estimate of 54.4%. Recall that levels above 50% represent growth and those under 50% represent decline.

Monday’s ISM data showed that new orders, production and employment all posted gains in March. While order backlogs were growing, there was also a note that the supplier deliveries were now slowing at a slower rate. The ISM readout also showed that raw materials inventories were growing while customer inventory levels were viewed as being too low.

All this sets the stage for better expectations ahead. Of the 18 manufacturing industries, an overwhelming majority of 16 of them reported growth in March. The only two categorized industries reporting contraction in March were grouped in the apparel, leather and allied products and in the paper products.

These were some of the readouts noted in the Manufacturing ISM report for March:

  • The New Orders Index was 57.4%, up by 1.9 percentage points from the February reading of 55.5%.
  • The Production Index was 55.8%, a one-point gain compared to the February reading of 54.8%.
  • The Employment Index was 57.5%, up 5.2 percentage points from the February reading of 52.3%.
  • The Supplier Deliveries Index was 54.2%, a 0.7 percentage point decrease from the February reading of 54.9%.
  • The Inventories Index was 51.8%, down 1.6 percentage points from the February reading of 53.4%.
  • The Prices Index was 54.3%, a 4.9-percentage point gain from the February reading of 49.4%, and also indicating a return of increasing raw materials prices after a two-month respite.

While the latest ISM report was stronger, there were still some notes of caution. The report said:

Imports expansion declined to near-zero expansion levels. Overall, inputs continue to reflect an easing business environment, but to a lesser extent than in February, confirmed by the Prices Index returning to expansion… Exports orders continue to expand, but at marginal levels.

The Dow Jones industrials last seen up over 200 points, with all 30 Dow stocks previously indicated to have positive openings. The S&P 500 was up 21 points and, the tech-heavy Nasdaq was up 53 points. The yield on the 10-year Treasury note was last seen up five basis points at 2.465%, after seeing a low in recent days of about 2.38%.


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