Economic activity in the manufacturing sectorexpanded in March for the fourth consecutive month, and the overall economy grew for the 46th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management^™ Manufacturing Business Survey Committee. "The PMI^™ registered 51.3 percent, a decrease of 2.9 percentage points from February's reading of 54.2 percent, indicating expansion in manufacturing for the fourth consecutive month, but at a slower rate. Both the New Orders and Production Indexes reflected growth in March compared to February, albeit at slower rates, registering 51.4 and 52.2 percent, respectively. The Employment Index registered 54.2, an increase of 1.6 percentage points compared to February's reading of 52.6 percent. The Prices Index decreased 7 percentage points to 54.5, and the list of commodities up in price reflected far fewer items than in February. In addition, the Backlog of Orders, Exports and Imports Indexes all grew in March."

Of the 18 manufacturing industries, 14 are reporting growth in March in the following order: Wood Products; Furniture & Related Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Paper Products; Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Nonmetallic Mineral Products; Computer & Electronic Products; Transportation Equipment; Printing & Related Support Activities; Primary Metals; and Food, Beverage & Tobacco Products. The three industries reporting contraction in March are: Petroleum & Coal Products; Chemical Products; and Machinery.

WHAT RESPONDENTS ARE SAYING …

• "Beginning to feel the seasonal upswing in business — energy and resin remain a concern." (Food, Beverage & Tobacco Products)
• "Medical reimbursements from insurance companies, particularly Medicare, are slowing." (Miscellaneous Manufacturing)
• "While the second half of 2013 looks promising, the first half is a mixed bag." (Computer & Electronic Products)
• "Things seem slightly better than last year, but still not great." (Printing & Related Support Activities)
• "Automotive is still very strong." (Fabricated Metal Products)
• "Post-election in the U.S. — companies within the oil and gas sector are still waiting for signs of some regulatory certainty or stability." (Petroleum & Coal Products)
• "Reduced government spending in the defense sector lowers business output." (Transportation Equipment)
• "Business is continuing to be brisk." (Furniture & Related Products)
• "Market continues to be strong, and our production is exceeding plans at this time." (Wood Products)
• "Sales are low, even adjusted for seasonal variation." (Chemical Products)

COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY

Commodities Up in Price 
Corrugated Boxes (8); HDPE (3); Lumber (3); Pallets; Plastic Resins (2); and Polypropylene (5).

Commodities Down in Price 
Sugar; and Wheat (3).

Commodities in Short Supply 
No commodities are reported in short supply.

Note: The number of consecutive months the commodity is listed is indicated after each item.

MARCH 2013 MANUFACTURING INDEX SUMMARIES

PMI™

Manufacturing expanded in March as the PMI^™ registered 51.3 percent, a decrease of 2.9 percentage points when compared to February's reading of 54.2 percent. This month's reading reflects the fourth consecutive month of growth in the manufacturing sector. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI^™ in excess of 42.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the March PMI^™ indicates growth for the 46th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the fourth consecutive month. Holcomb stated, "The past relationship between the PMI^™ and the overall economy indicates that the average PMI^™ for January through March (52.9 percent) corresponds to a 3.3 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI^™ for March (51.3 percent) is annualized, it corresponds to a 2.8 percent increase in real GDP annually."

THE LAST 12 MONTHS

New Orders

ISM's New Orders Index registered 51.4 percent in March, a decrease of 6.4 percentage points when compared to the February reading of 57.8 percent. This represents growth in new orders for the third consecutive month. A New Orders Index above 52.2 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant2000 dollars).

The 12 industries reporting growth in new orders in March — listed in order — are: Wood Products; Furniture & Related Products; Nonmetallic Mineral Products; Apparel, Leather & Allied Products; Fabricated Metal Products; Miscellaneous Manufacturing; Transportation Equipment; Plastics & Rubber Products; Machinery; Paper Products; Electrical Equipment, Appliances & Components; and Food, Beverage & Tobacco Products. The two industries reporting a decrease in new orders during March are: Petroleum & Coal Products; and Primary Metals.

Production

ISM's Production Index registered 52.2 percent in March, which is a decrease of 5.4 percentage points when compared to the 57.6 percent reported in February. This indicates growth in production for the seventh consecutive month. An index above 51.2 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

The 13 industries reporting growth in production during the month of March — listed in order — are: Wood Products; Paper Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Computer & Electronic Products; Apparel, Leather & Allied Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Primary Metals; Fabricated Metal Products; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products. The two industries reporting a decrease in production in March are: Machinery; and Chemical Products.

Employment

ISM's Employment Index registered 54.2 percent in March, which is 1.6 percentage points higher than the 52.6 percent reported in February. This month's reading indicates growth in employment for the 42nd consecutive month. An Employment Index above 50.5 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, 10 reported growth in employment in March in the following order: Plastics & Rubber Products; Furniture & Related Products; Wood Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Fabricated Metal Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Machinery. The three industries reporting a decrease in employment in March are: Transportation Equipment; Chemical Products; and Apparel, Leather & Allied Products.

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was faster in March as the Supplier Deliveries Index registered 49.4 percent, which is 2 percentage points lower than the 51.4 percent reported in February. This indicates the first month of faster supplier deliveries, following four consecutive months of slower deliveries. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The seven industries reporting slower supplier deliveries in March — listed in order — are: Primary Metals; Furniture & Related Products; Computer & Electronic Products; Fabricated Metal Products; Miscellaneous Manufacturing; Chemical Products; and Electrical Equipment, Appliances & Components. The four industries reporting faster supplier deliveries in March are: Nonmetallic Mineral Products; Petroleum & Coal Products; Paper Products; and Food, Beverage & Tobacco Products. Seven industries reported no change in supplier deliveries in March compared to February.

Inventories*

The Inventories Index registered 49.5 percent in March, which is 2 percentage points lower than the 51.5 percent reported in February. This month's reading indicates that respondents are reporting inventories are contracting in March, following two consecutive months of growth. An Inventories Index greater than 42.7 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The seven industries reporting higher inventories in March — listed in order — are: Plastics & Rubber Products; Wood Products; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Paper Products; Transportation Equipment; and Fabricated Metal Products. The seven industries reporting decreases in inventories in March — listed in order — are: Primary Metals; Miscellaneous Manufacturing; Computer & Electronic Products; Machinery; Food, Beverage & Tobacco Products; Chemical Products; and Apparel, Leather & Allied Products.

Customers' Inventories*

The ISM Customers' Inventories Index registered 47.5 percent in March, which is 1 percentage point higher than in February when the index registered 46.5 percent. This month's reading indicates that customers' inventories are considered too low, but slightly higher than reported in February. Customers' inventories have registered at or below 50 percent for 48 consecutive months. A reading below 50 percent indicates customers' inventories are considered too low.

The six manufacturing industries reporting customers' inventories as being too high during the month of March — listed in order — are: Petroleum & Coal Products; Primary Metals; Food, Beverage & Tobacco Products; Chemical Products; Machinery; and Miscellaneous Manufacturing. The seven industries reporting customers' inventories as too low during March — listed in order — are: Electrical Equipment, Appliances & Components; Transportation Equipment; Computer & Electronic Products; Plastics & Rubber Products; Furniture & Related Products; Fabricated Metal Products; and Apparel, Leather & Allied Products.

Prices*

The ISM Prices Index registered 54.5 percent in March, which is a decrease of 7 percentage points compared to the February reading of 61.5 percent. In March, 21 percent of respondents reported paying higher prices, 12 percent reported paying lower prices, and 67 percent of supply executives reported paying the same prices as in February. A Prices Index above 49.7 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices.

Of the 18 manufacturing industries, 10 reported paying increased prices during the month of March in the following order: Textile Mills; Petroleum & Coal Products; Plastics & Rubber Products; Wood Products; Furniture & Related Products; Paper Products; Printing & Related Support Activities; Miscellaneous Manufacturing; Chemical Products; and Electrical Equipment, Appliances & Components. The six industries reporting paying lower prices during March — listed in order — are: Nonmetallic Mineral Products; Computer & Electronic Products; Machinery; Transportation Equipment; Fabricated Metal Products; and Food, Beverage & Tobacco Products.

Backlog of Orders*

ISM's Backlog of Orders Index registered 51 percent in March, which is 4 percentage points lower than the 55 percent reported in February. This is the second month of growth in order backlogs since March 2012, when the index registered 52.5 percent. Of the 85 percent of respondents who reported their backlog of orders, 22 percent reported greater backlogs, 20 percent reported smaller backlogs, and 58 percent reported no change from February.

The eight industries reporting increased order backlogs in March — listed in order — are: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Primary Metals; Furniture & Related Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; and Machinery. The seven industries reporting decreases in order backlogs during March — listed in order — are: Plastics & Rubber Products; Transportation Equipment; Paper Products; Computer & Electronic Products; Miscellaneous Manufacturing; Chemical Products; and Petroleum & Coal Products.

New Export Orders*

ISM's New Export Orders Index registered 56 percent in March, which is 2.5 percentage points higher than the 53.5 percent reported in February. This month's reading represents the fourth consecutive month of growth in new export orders, and follows six months of contraction dating back to June 2012.

The 12 industries reporting growth in new export orders in March — listed in order — are: Wood Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Plastics & Rubber Products; Paper Products; Transportation Equipment; Fabricated Metal Products; Miscellaneous Manufacturing; Machinery; Computer & Electronic Products; and Chemical Products. The two industries reporting a decrease in new export orders during March are: Primary Metals; and Furniture & Related Products.

Imports*

ISM's Imports Index registered 54 percent in March, which is the same reading as reported in February. This month's reading indicates that import levels are growing for the third time in the past four months.

The nine industries reporting growth in imports during the month of March — listed in order — are: Wood Products; Apparel, Leather & Allied Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Computer & Electronic Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; and Furniture & Related Products. The three industries reporting a decrease in imports during March are: Primary Metals; Machinery; and Chemical Products.

* The Inventories, Customers' Inventories, Prices, Backlog of Orders, New Export Orders and Imports Indexes do not meet the accepted criteria for seasonal adjustments.

Buying Policy

Average commitment lead time for Capital Expenditures increased 2 days to 114 days. Average lead time for Production Materials increased 1 day to 57 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies increased 1 day to 26 days.