manufacturing activity grew for a fourth straight month in
March but at a slower pace as declines were seen in new orders,
production and prices, according to the Institute for Supply
The ISMs purchasing
managers index (PMI) for March dropped 2.9 percentage points
from the previous month to 51.3, which still indicates overall
growth in the domestic manufacturing economy.
The new orders index fell 6.4
percentage points to 51.4, the production index slipped 5.4
points to 52.2 and the prices index declined 7 points to
Both primary metal producers and
fabricators said they experienced production growth last month,
although producers saw a decline in new orders. Fabricators saw
a rise in new orders in March while continuing to hire workers
and build inventories. "Automotive is still very strong," one
surveyed fabricator said.
Metal producers lowered their
inventories in March and deemed their customers
inventories as too high; both fabricators and metal producers
reported that their order backlogs had increased.
"A company we buy steel from
also pre-cuts steel for new home construction," a purchasing
manager member of ISMs Chicago chapter said. "Back in
2007, they shipped 110 rig packages per week; today, they ship
two rig packages per week."
A buyer in the transportation
equipment sector said that reduced government spending in the
defense sector had lowered business output.
"Any (business) exposed to the
defense sector (is) feeling the squeeze from government
spending cuts," said Nigel Gault, chief U.S. economist for
Lexington, Mass.-based IHS Global Insight Inc.
Another Chicago survey
respondent said there had been "lots of noise of large orders
coming, but we are still waiting to see them."
Fabricators said they paid lower
prices last month, while producers input prices were flat
compared with February.
Meanwhile, fabricators saw
export orders rise, but producers export orders fell.
Metal producers saw imports decline; conversely, fabricators
saw an increase in imports.
"The most encouraging indicator
in the report was export orders, whose index hit its highest
level since April 2012," Gault said. "Sectors that benefit from
the housing revival are leading the way (such as wood
products), while the news on export orders promises better
times ahead for those selling abroad."