U.S. manufacturing activity remained “subdued” despite picking up a little in March, according to the latest figures from Markit. The Markit Flash U.S. Manufacturing PMI increased from 51.3 in February, its slowest pace in more than three years, to 51.4 in March. This suggests that manufacturing in the U.S. remains challenged despite some signs of progress, including accelerated growth for new orders (up from 51.7 to 52.8), output (up from 51.3 to 51.4) and hiring (up from 51.5 to 52.1). The pickup in demand is notable, even as the sales expanded at a much faster pace at this point last year, when the index for new orders stood at 56.4. On the other hand, exports (up from 49.1 to 50.0) were stagnant in March, stabilizing a bit after contracting in February. In general, the strong dollar and weaknesses abroad have dampened international demand and overall sentiment over the course of the past year, with the export index averaging 50.2 over the past 15 months.
The Markit Flash Eurozone Manufacturing PMI edged slightly higher, up from 51.2 in February to 51.4 in March. The February reading was a 12-month low, with this latest figure not far from that level. Each represented some easing in growth so far in 2016, as the headline index was down from 53.2 in December, which had been its fastest pace since April 2014. The underlying data in March were mixed. On the positive side, new orders (up from 51.9 to 52.0) and output (up from 52.3 to 52.7) expanded at a faster rate for the month. At the same time, exports (down from 51.5 to 51.0) and employment (down from 51.0 to 50.5) decelerated somewhat.
More than anything, this report shows that Europe is not immune to the softening in manufacturing activity seen worldwide. Indeed, preliminary data on activity in both France (down from 50.2 to 49.6) and Germany (down from 50.5 to 50.4) both softened in March. French manufacturers contracted for the first time since August, led lower by weaker sales, and German production expanded at its slowest pace since November 2014.
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