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- Brief: Industrials Signal Near-Term Caution
Brief: Industrials Signal Near-Term Caution
March U.S. ISM manufacturing activity surveys show sector activity contracted after just two months of >50 readings. Subindices for new orders, employment, and supply chain prices reflect near-term tariff concerns
Mobius Intel Brief:
The Institute for Supply Management’s latest manufacturing PMI showed the U.S. manufacturing sector fell 1.3 percentage points (pp) to 49% in March, ending a brief two-month streak of expansion that followed 26 consecutive months of shrinking activity.
Key Intel
The ISM’s March headline manufacturing PMI was joined by deteriorating subindices for manufacturing employment, new orders, production, and input prices. Seasonal charts for the headline PMI and each subindex are available for Pro users below.
Employment: The ISM manufacturing employment PMI fell 2.9 pp to 44.7 percent—the lowest seasonal print since March 2020’s COVID-induced 44.6.
New Orders: The ISM new orders index fell for the second-consecutive month, dropping 3.4 pp to 45.2% after producers saw increased demand in 2H24 ahead of potential port worker strikes and Trump administration tariffs in 1Q25.
Input Prices: Manufacturing input prices increased sharply as producers’ raw material supply chains were hit by preemptive price hikes ahead of the Trump administration’s tariff threats.
According to ISM Chair Timothy Fiore:
“Demand and production retreated and destaffing continued, as panelists’ companies responded to demand confusion. Prices growth accelerated due to tariffs, causing new order placement backlogs, supplier delivery slowdowns and manufacturing inventory growth. Forty-six percent of manufacturing gross domestic product (GDP) contracted in March, up from 24 percent in February. The share of manufacturing sector GDP registering a composite PMI® calculation at or below 45 percent (a good barometer of overall manufacturing weakness) was 7 percent in March, a 5-percentage point increase compared to the 2 percent reported in February. Of the six largest manufacturing industries, three (Petroleum & Coal Products; Computer & Electronic Products; and Transportation Equipment) expanded in March, one fewer than in February.”
