Today, the Institute for Supply Management (ISM) released its March report on manufacturing activity. While today’s news shows that the manufacturing sector continued to decline last month, gradual improvements in several of the report’s major components over the course of the first quarter signal that the worst may be over for manufacturing.
The ISM’s overall PMI index for manufacturing activity improved, albeit modestly, for a third consecutive month in March to a level of 36.3 after bottoming out at 32.9 in December. This is an early indication that the pace of decline in the manufacturing sector is starting to decelerate.
Also, coming on the back of last week’s favorable Commerce Department report on new durable goods orders in February, the fact that today’s March ISM report contained the highest level of new manufacturing orders in seven months signals that conditions should continue to improve gradually for manufacturers in coming months.
While not as pronounced, today’s report also contained some a hopeful sign on the trade front. After hitting a floor in December, new export orders increased for the second time in three months in March, which is another hopeful sign that the enormous collapse in merchandise exports, which fell at an annual rate of 32 percent in the fourth quarter of last year, will not be repeated in the first quarter.