It was not a game-changing report issued earlier this morning; indeed, no change in direction was inferred. However, the latest manufacturing data was somewhat encouraging, as it suggested that after the long and arduous winter, the industrial sector was alive and well--if hardly booming.
Specifically, the Institute for Supply Management (ISM) reported that its survey on manufacturing activity edged up to a solid reading of 53.7 in March, from 53.2 in February, and 51.3 in January. This was the best showing by this series since last December, when this reading was up to 56.5. That was, presumably, the last month that the weather was not a factor.
In March, we sense that the weather was less of an issue. That is because although the temperatures were below average once again, snowfall was limited, overall. That was not the case in January or February, when heavy snows had blanketed much of the nation.
As to this aggregate score, any reading above 50.0 signals that manufacturing is increasing, while an outcome below that threshold suggests some contraction in this key subset of overall economic activity. The report is put out by the ISM, an Arizona-domiciled trade group. The companion report on nonmanufacturing activity is scheduled for release Thursday morning at 10:00 (EDT).
On the whole, the 53.7 score, albeit 0.2% less than expected, was still in line with the average for the past 12 months, a period that has seen activity average 54.0 per month, within a range of 50.0 to 57.0. The sector troughed last April and May and peaked during the fourth quarter of last year.
Breaking the report down, we find that new orders and production both improved last month, as did backlogs and exports. On the other hand, employment grow more slowly, as did supplier deliveries, while inventory levels were flat.
Among the purchasing managers surveyed for this report, there was some suggestion that business activity was heating up in both petroleum and coal products, as well as in transportation equipment. There also was some indication that export orders were picking up, but that weather was still having some impact in the latest month in food, beverage, and tobacco products.
Taken as a whole, this was a decent report, but, as indicated, no watershed event. Our thinking is that March was generally better for the economy than the earlier two months of 2014, but was probably not strong enough to push GDP growth back above 2% for the entire opening period.
At the time of this article's writing, the author did not have positions in any of the companies mentioned