New Orders growth slows, production growth accelerates

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Economic activity in the manufacturing sector expanded in March for the 32nd consecutive month, and the overall economy grew for the 34th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business released Monday, April 2.

The PMI registered 53.4 percent, an increase of 1 percentage point from February’s reading of 52.4 percent. A reading above 50 percent indicates that the manufacturing economy generally is expanding; below 50 percent indicates that it generally is contracting. A PMI in excess of 42.6 percent, over a period of time, generally indicates an expansion of the overall economy.

ISM’s New Orders Index registered 54.5 percent in March, which is a decrease of 0.4 percentage point when compared to the February reading of 54.9 percent; this represents a continuation of growth for the 35th consecutive month, but at a slightly slower rate. A New Orders Index above 52.3 percent, over time, generally is consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

ISM’s Production Index registered 58.3 percent in March, which is an increase of 3 percentage points when compared to the 55.3 percent reported in February; this indicates growth for the 34th consecutive month. An index above 51.2 percent, over time, generally is consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

“The past relationship between the PMI and the overall economy indicates that the average PMI for January through March (53.3 percent) corresponds to a 3.6 percent increase in real gross domestic product,” said Bradley J. Holcomb, chair of the Institute for Supply Management Manufacturing Business Survey Committee. “In addition, if the PMI for March (53.4 percent) is annualized, it corresponds to a 3.7 percent increase in real GDP annually.”

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