March 2023 Manufacturing ISM Report On Business Shows Contraction with New Orders, Production, Employment, and Backlog of Orders

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected. Economic activity in the manufacturing sector contracted in March for the fifth consecutive month following a 28-month period of growth, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The U.S. manufacturing sector contracted in March, as the Manufacturing PMI registered 46.3 percent, 1.4 percentage points lower than the reading of 47.7 percent recorded in February. This is the fifth month of contraction and continuation of a downward trend that began in June 2022.

ISM’s New Orders Index contracted for the seventh consecutive month in March, registering 44.3 percent, a decrease of 2.7 percentage points compared to February’s reading of 47 percent.

The Production Index registered 47.8 percent in March, 0.5 percentage point higher than the February reading of 47.3 percent, indicating a fourth month of contraction after 30 consecutive months of growth.

ISM’s Employment Index registered 46.9 percent in March, 2.2 percentage points lower than the February reading of 49.1 percent. The index indicated employment contracted again, continuing a trend of weak performance since September 2022.

The delivery performance of suppliers to manufacturing organizations was faster for a sixth straight month in March, as the Supplier Deliveries Index registered 44.8 percent, 0.4 percentage point lower than the 45.2 percent reported in February. This month’s reading indicates the fastest supplier delivery performance since March 2009, when the index registered 43.2 percent.

The Inventories Index registered 47.5 percent in March, 2.6 percentage points lower than the 50.1 percent reported for February. Manufacturing inventories contracted compared to February.

ISM’s Backlog of Orders Index registered 43.9 percent in March, a 1.2-percentage point decrease compared to February’s reading of 45.1 percent, indicating order backlogs contracted for the sixth consecutive month after a 27-month period of expansion.

The six manufacturing industries that reported growth in March — in the following order — are: Printing & Related Support Activities; Miscellaneous Manufacturing; Fabricated Metal Products; Petroleum & Coal Products; Primary Metals; and Machinery. The 12 industries reporting contraction in March, in the following order, are: Furniture & Related Products; Nonmetallic Mineral Products; Textile Mills; Plastics & Rubber Products; Paper Products; Wood Products; Food, Beverage & Tobacco Products; Apparel, Leather & Allied Products; Chemical Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; and Transportation Equipment.