Manufacturing Expands for 3rd Month: ISM

In good news for the manufacturing sector, ISM reported on April 1 that its latest Manufacturing PMI shows the economic activity expanded in March. This marks an increase for three consecutive months.

The Manufacturing PMI registered 52.7% in March, a 0.3-percentage point increase compared to the reading of 52.4% in February. 

The overall economy continued to expand for the 17th month in a row. 

"Looking at the manufacturing economy, 16% of the sector's gross domestic product (GDP) contracted in March, compared to 21 % in February, and the percentage of manufacturing GDP in strong contraction increased to 4%, compared to 1 % in February," said Susan Spence, chair of ISM's business survey committee.

Index Readings 

The Supplier Deliveries Index indicated a further slowing for the fourth month in a row after one month in 'faster' territory. The reading of 58.9% is up 3.8 percentage points from the 55.1% recorded in February.

Other index information is as follows:

• Inventories Index registered 47.1%, down 1.7 percentage points compared to February's reading of 48.8%.
• Customers' Inventories Index reading of 40.1% is a 1.3-percentage point increase compared to February.
• New Export Orders Index reading of 49.9% is 0.4 percentage point lower than the reading of 50.3% registered in February and marks a return of this subindex to contraction territory.
• Imports Index registered 52.6%, 2.3 percentage points lower than February's reading of 54.9%.
• New Orders Index registered 53.5%, down 2.3 percentage points compared to February's figure of 55.8%.
• Production Index registered 55.1%, which is 1.6 percentage points higher than February's reading of 53.5%.
• Prices Index registered 78.3%, a 7.8-percentage point jump from February's reading of 70.5%.
• Backlog of Orders Index registered 54.4%, down 2.2 percentage points compared to the 56.6% recorded in February.
• The Employment Index registered 48.7%, down 0.1 percentage point from February's figure of 48.7%.

What Respondents are Saying

"This is expected to be a transition year for the U.S. trucking market, with gradual stabilization driven by capacity tightening and replacement demand instead of growth. Demand should stay constrained by weak carrier profitability and high equipment costs but improve modestly late in the year." [Transportation Equipment]

"Changes in the tariff structure are bringing cautious opportunities to offset significant costs for the balance of 2026. The actions in Iran, however, add a new wrinkle to energy costs throughout the world, including India. We continue to try and plan for the unpredictable and unexpected." [Transportation Equipment]

"We're seeing steady increases in activity, but geopolitical issues and the Iran war are already waning sentiment." [Fabricated Metal Products]

"Customer orders have increased considerably as the construction market remains strong, resulting in higher production volume and increased forecasts to suppliers." [Machinery]

"Current Middle East unrest is already starting to impact business operations by increasing lead times, costs, container delays and the like." [Food, Beverage & Tobacco Products]

"Lots of relief from Supreme Court striking down (emergency) tariffs, particularly with organic cane sugar from Brazil." [Food, Beverage & Tobacco Products]

"Geopolitical tensions related to the conflict in Iran are contributing to rising manufacturing supply costs, and ongoing tariff uncertainty is negatively impacting purchasing strategies and cost forecasts." [Chemical Products]

"Ongoing geopolitical instability has emerged as a persistent factor influencing global trade dynamics. We anticipate strategic realignment of supply chains as organizations respond to energy market volatility and shifting trade policies. In light of these macroeconomic headwinds, we — like most organizations — are maintaining a cautious posture regarding investment commitments while continuing to monitor market conditions closely. Our purchasing strategy is being recalibrated to address supply chain vulnerabilities exposed by energy market volatility and evolving trade protectionism." [Chemical Products]

"Metal commodity prices continue to put pressure on mechanical commodities. Memory price escalation is causing large cost increases that cannot be mitigated in other areas of the product cost." [Computer & Electronic Products]

"The Middle East war has created domestic and global turmoil for the olefins and polyolefins business. Feedstocks and finished product pricing are accelerating dramatically as Middle Eastern and Asian producers suffer from shipping blockages. Global customers for packaging resins are scrambling to cover needs from North America and South America in the face of supply chain complications." [Plastics & Rubber Products]