March was a good month for manufacturing, according to the Institute for Supply Management. The ISM’s manufacturing Purchasing Manager’s Index rose 3.9 points from February to reach 64.7%, making March the tenth month of an expanding industrial economy following a sharp downturn in April 2020.
March saw some of the same trends as February, but at an accelerated pace: the ISM’s indexes for new orders, production, employment, backlog of orders, and imports all continued to grow at a faster rate than they grew in February.
The indexes tracking manufacturing production (up 3.2 points to 68.0%) and new orders (up 4.9 points to 68.1%) notched ten-month growth streaks, while the index tracking order backlogs reached nine months of growth as it rose 3.5 points to 67.5%. The employment index, which rose 5.2 points to 59.6%, continued to grow for a fourth month.
Some metrics showed signs of a recovery that was still going, but slowing. Prices, which have been rising now for 10 months, continued to increase, but at a slower pace than before: that index fell 0.4 points to 85.6%. And the rate of new export orders remined in growth territory at 54.5%, but slipped 2.7 points from its February rating of 57.2%.
Bucking its one-month dip into shrinkage, the ISM’s inventories index returned to growth territory after slipping to 49.7% in February: it rose 1.1 points to 50.8%.
And where March, in many areas, improved on February’s improvements, some long-term hurdles came along too. Supplier deliveries have been getting slower and slower now for 61 straight months, and in March they continued to slow at a faster rate: The ISM’s supplier deliveries index, on which a higher number indicates slowing deliveries, rose 4.6 points to 76.6%.
Timothy Fiore, chair of the ISM’s Manufacturing Business Survey Committee, said that surveyed manufacturing executives reported continued difficulty to meet increasing demand thanks to COVID-19 related parts and materials shortages.
“Extended lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are all affecting all segments of the manufacturing economy,” Fiore said. And, he said, while the employment index continues to rise, panelists “continue to note significant difficulties in attracting and retaining labor at their companies’ and suppliers’ facilities.”
And, if the sustained impact of the pandemic on suppliers wasn’t bad enough already, some surveyed panelists reported that severe weather events from February had caused their own supply chain snarls in March. A chemical products executive said their company had seen “significant supply impacts on raw materials” thanks to storms in Texas, and a plastics and rubber executive said the storms had caused “tremendous stress on the supply chain,” with chemicals and resin on allocation and unavailable.
“Winter Storm Uri has made daily life in supply chain quite a challenge,” said a food and beverages leader, referring to the winter storms which hit the Southern U.S. in the first half of February. “Everything from plastic substrates to adhesives have been significantly impacted by the production interruptions.”
Yet, despite the ongoing supply chain and talent difficulties, manufacturers surveyed are increasingly optimistic about the rest of the year ahead. “Business is even stronger for us this year through the third quarter, and we expect a very healthy growth of our manufacturing sales,” said an executive in the electrical equipment and appliances field. Fiore noted that panelists made eight positive comments for each negative comment, compared to a five-to-one positive-to-negative ratio in February’s survey.